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Navigating Natural Gas’s Bearish Landscape: Key Indicators and Patterns

By:
Bruce Powers

Despite a brief rally, the 50-Day EMA downturn signals persistent bearish sentiment, with Fibonacci levels and prior swing lows pointing towards lower price levels for natural gas.

Natural gas, FX Empire

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Natural Gas Forecast Video for 30.11.23 by Bruce Powers

Although natural gas managed to close a little above its uptrend line yesterday, it quickly fell back below the line today, which is where most of today’s activity has taken place. This reflects continued downward pressure in natural gas following Monday’s drop below the line. The retracement can be anticipated to continue lower unless signs of strength return.

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Tuesday’s Bullish Reversal Failed

Yesterday’s sharp gap up and advance into resistance around the 50-Day EMA (orange) provided brief hope from the bulls that a retracement low may be in and that a daily close below the long-term uptrend line may not be too bearish. Nevertheless, today’s price action shows bearish sentiment continuing to dominate. Therefore, lower prices and a continuation of the retracement remains the most likely scenario in the near term.

50-Day and 200-Day EMA Angle Down

The 50-Day EMA turned down recently for the first time since it started rising on June 15 and the 200-Day EMA has also started to angle down since going relatively sideways since early-October. These are trend indicators for different time frames, and each is saying the same thing. Natural gas is bearish and getting more bearish.

It reaches the 88.6% Fibonacci retracement at 2.68 and fills the gap from September 27 at 2.67. Further down is the completion of an ABCD pattern at 2.62. That is where the CD leg of the declining trend matches the price change in the initial AB leg of the pattern. When the 2.62 level is reached there is similarity between the two swings, AB and CD.

Potential Support at Fibonacci and Monthly Price Levels

If prices keep falling thereafter there is potential resistance from prior swing lows or monthly lows starting at 2.55 and down to 2.425. The lower price level is the more significant level as it is a monthly low and provides a higher swing low for the uptrend. Once busted to the downside the integrity of the uptrend price structure is at risk of reversing to the downside. The higher price levels therefore are more likely to be reached before noticeable support kicks in.

For a look at all of today’s economic events, check out our economic calendar.

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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