Natural Gas Volatility Surges: Will It Sustain Its Bullish Momentum?

Bruce Powers
Published: Sep 29, 2023, 20:18 UTC

Natural gas surges to a 29-week high, reflecting rising demand, but faces resistance at 2.997. Closing above this level could signal further advances, while a drop below 2.87 may lead to a deeper pullback.

Natural Gas pipelines, FX Empire

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Natural Gas Forecast Video for 02.10.23 by Bruce Powers

Natural gas sees increased volatility as it forms an outside day. Earlier in the session it advanced to a new trend high and got back above the trend line but was quickly met with resistance at a high of 2.997. Subsequently, sentiment switched to bearish and natural gas sold off, breaking below yesterday’s low of 2.87 before finding support at the day’s low of 2.855 and bouncing.

Today’s candle is red for the day, but if natural gas can close in the top half of the day’s range it may have a chance to continue to advance. However, as of today’s high it was up 17.4% from Tuesday’s low and may need a bit of a rest before it is ready to continue. The halfway point for today’s range is 2.926, if a new low or high is not made prior to today’s close.

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Rally Above Today’s High Points to Higher Targets

An advance above today’s high triggers a possible advance. If natural gas can then maintain strength, it has a chance to reach the next two price targets. The first target is at the August 9 swing high of 3.02. A daily close above that level will confirm a continuation of the larger trend rising from the April 14 trend low as it will trigger a higher swing high.

Today’s high was very close to that price level. Subsequently, the completion of a rising extended ABCD pattern provides a target at 3.06. The CD leg of the pattern has been extended from the AB leg by the 127.2% Fibonacci ratio. Wednesday’s rally reached the initial target for the ABCD pattern at 2.95 where the two legs of the pattern are equal. Subsequently, over the past two days the 2.95 price area continued to be tested as resistance.

Weekly Chart is Bullish

Also of note, is the price behavior as seen in the weekly chart. This week’s rally put natural gas at a 29-Week high, and it is on track to end the week with the highest weekly closing price over that period. This behavior reflects increasing demand for natural gas and improves the chance that it can trend higher. A close today below 2.87 would negate that bullish indication.

Deeper Correction Signaled on Drop Below 2.85

Alternatively, a deeper pullback is likely on a drop below today’s low. The trendline is the nearest support area of interest but that may be broken to the downside, in which case natural gas may move into the area of this week’s gap.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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