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Navigating Natural Gas Trends: Resistance, Downtrends, and Potential Support

By:
Bruce Powers

Natural gas faces resistance at a crucial uptrend line, signaling a potential continued downtrend unless signs of strength emerge. Monthly bearish signals add to the downward pressure.

Natural gas tank, FX Empire

In this article:

Natural Gas Forecast Video for 01.12.23 by Bruce Powers

Natural gas continues to consolidate around resistance at its long-term uptrend line. Today’s high of 2.855 was almost an exact test of the line. The line previously represented support and now resistance. This is typical behavior for a trend that is weakening. In addition, a bearish signal was generated on the monthly chart as natural gas dropped below October’s low of 2.82 this month. Therefore, unless signs of strength occur the downtrend is anticipated to continue and eventually test lower potential support levels.

A graph with lines and lines Description automatically generated with medium confidence

Drop Below 2.71 Points to Lower Prices

A drop below the two-day low of 2.76 will indicate weakening but there is no bearish continuation indicated until the recent swing low at 2.71 is broken to the downside. The next lower target is then around the completion of a falling ABCD pattern at 2.62. That’s where the second leg down from the October 27 swing high (A), labeled CD, matches the decline in the first leg down shown as AB.

Once there is a similar move in the CD leg the possibility for support exists around that price area. In addition, if the 2.62 price level is reached the gap from September 27 will have been filled as that happens at 2.67. Lower price levels of interest are marked with a black right horizontal line on the chart and includes a prior swing low at 2.55 and prior monthly lows at 2.50 and 2.425.

Monthly Bearish Signal Confirmed

This month a monthly low was broken to the downside and natural gas continues to show weakness as it trades near or below October’s low. There have been three daily closes since the breakdown, which confirms the bearish monthly trigger.

Key Resistance is at 2.99

On the upside, the current consolidation range has a high of 2.99, which was hit on Tuesday. Unless there is a decisive advance above the high, rallies towards that high are expected to encounter resistance again. The 50-Day EMA (orange) is at 2.855 and the 200-Day EMA (blue) is at 3.15. Each line has shown resistance recently and can be expected to do so again if there are further signs of strengthening above 2.99.

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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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