Natural Gas Stuck on the Bottom Yet Price Action is Constructive

Natural Gas Forecast Video for 18.05.23 by Bruce Powers

Natural gas pulls back slightly today as it dips below yesterday’s low of 2.34 to reach 2.32. A test of support around the 34-Day EMA looks possible. That EMA is currently at 2.29. Natural gas moved above the 34-Day line two days ago after testing the line as resistance for four consecutive days previously. It should act as support on the way down. If not, a daily close below the 34-Day line is short-term bearish. Otherwise, a bullish reversal is anticipated around the 34-Day EMA.

Initial Trend Target of 2.61

A rising ABCD pattern completes up at 2.61. Natural gas is working on the completion of the CD leg now towards that initial target. So far, it looks like the target should be reached as the price structure of the developing uptrend is intact. That would start to change on a daily close below the recent swing low at 2.15. Further, the relative strength index momentum oscillator shows a bullish ascending triangle pattern. A breakout above the line will provide additional evidence to support an eventual rally off the bottom.

Consolidation Bottoming Process Continues

Natural gas has been consolidating around the bottom of its trend for over two months as it continues to work on the completion of a bottom. Price action has more recently taken the shape of an expanding triangle pattern. This means that the developing ABCD pattern is happening within the larger consolidation pattern. That could influence how the trend pattern develops as momentum and volatility can be muted and influenced by the larger consolidation pattern. Nevertheless, so far strength in natural gas is improving.

Signs of Strength Above 2.44

Signs of strength are first indicated on a move above today’s high of 2.44. Natural gas would then target the short-term trend high at 2.47. A daily close above that second high triggers a bull trend continuation. The chance of natural gas reaching the ABCD target then improves. Higher up is the target from the completion of a measured move at 3.00. The measured moves are marked on the chart. If fulfilled, the move from the low at 2 would match the advance from the first move at 1.

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