Natural Gas Surges to 36-Week High: Is There More to Go?

Natural Gas Forecast Video for 09.10.23 by Bruce Powers

Natural gas spikes to a new trend high and a 36-week high as it completes a 23.6% Fibonacci retracement of the internal downtrend that began from the November 2022 swing high. The initial Fibonacci retracement level was at 3.28 and natural gas is continuing its rise towards the next Fibonacci target at 3.38. That higher target is the 161.8% extension of the downswing the began from the August 9 peak. Natural gas is on track to close today at its highest weekly closing price in 37 weeks. As of the current day’s high of 3.36, it is pushing up against potential resistance around the top trend channel line and Fibonacci levels.

Beginning to Enter Overbought Territory

Moreover, natural gas is beginning to enter overbought territory based on the relative strength index (RSI) oscillator which rose above the 70 overbought mark today. Not since May 2022 has it been this high. Although prices can continue to rise when the RSI is overbought, it highlights the need for additional caution from the bulls as natural gas is getting extended. The risk of a correction is rising, yet there are no signs of it yet. Until then, the expectation is for a continuation higher.

Maintaining Signs of Strength After Hitting Target Zone

However, today’s high is sitting in an area of potential resistance with the confluence of the top trend channel line and the 23.6% Fibonacci retracement. The recent advances have been healthy and increase the chance that natural gas is becoming extended. At today’s high it was up by 38.0% from the August 24 swing low at 2.43, and 31.1% from the September 26 swing low of 2.55.

This also points out the need to be cautious as price may revert to the mean as a price correction takes hold. If a retracement begins then watch for support around the 200-Day EMA at 3.175. Further down is the long-term downtrend line, that was previously a resistance line and now should act as support since natural gas rose above it earlier this week.

Higher Targets Possible

There are a couple of higher targets to be aware of. The completion of a 23.6% Fibonacci retracement of the full downtrend is at 3.85. That also happens to be where the 200-Week EMA resides at 3.87. Together, these two indications point to a potentially solid resistance area.

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