Navigating Natural Gas: Unraveling Volatility and Trends

Natural Gas Forecast Video for 29.01.24 by Bruce Powers

Volatility in the price of natural gas continued Friday with an initial drop earlier in the session to a three-day low of 2.42. Buyers then stepped for a rally to a high of 2.67, which was a clear test of resistance at the uptrend line and 20-Day MA. That move put it back above the 200-Day and 50-Day MAs. Regardless, it is on track to close back below the 200-Day line, which is at 2.67. If natural gas can end this week above the 200-Day line, it would be a minor sign of strength.

Watching for Further Clarity

Today’s price action didn’t clarify much but if we had to label along with recent activity, it would be more on the bearish side than the bullish. Specifically, there was a daily bearish reversal signaled today with a drop below yesterday’s low. And the 200-Day line was successfully tested as resistance, a sign of weakening. Over the prior two days the price of natural gas got above the 200-Day line, although it could not remain above it.

Continues to Weaken Since October Peak

The progression of the decline from the October peak of 3.64 is bearish. If we step back and simplify price action recently, we end up with more than a few bearish indications. And again, today we have the same with a test of resistance at the 200-Day line. Including this week’s high there is a series of lower swing highs in the chart. This week’s rally tested resistance around the uptrend line, and it failed to hold, leading to aggressive intraday selling and then today’s bearish continuation. Nonetheless, sometimes when a chart seems clear, something unexpected happens. Since natural gas is sitting relatively near lows, a breakdown is difficult to rely upon.

Just a Couple Bullish Indications

Until there are more signs of strength, there are only a couple bullish indications. First, natural gas put in a higher swing low on January 22. And second, it has tested the long-term downtrend line as support and remains above it. Once volatility dies down a little a recognizable short-term pattern should develop. Today’s high can be watched since it tested the 200-Day line. Therefore, a breakout above it will trigger a daily breakout and a trendline break.

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