No Let Up as Selling Pressure Pushes Natural Gas Lower

Natural Gas Forecast Video for 01.02.23 by Bruce Powers

Downward pressure in natural gas persists as trading stays within Monday’s price range, but just barely. So far, for the second day in a row the day’s range was completely below the lower line of a descending parallel trend channel. It reflects continued downward pressure on price as is slowly accelerates its angle of decent. For the second day in a row, it looks like natural gas will close below last week’s low which is another bearish sign. It is now at the second most oversold level in almost three years based on the 14-Day RSI technical indicator.

88.6% Fibonacci Retracement Up Next

There are a couple price areas to watch for support if natural gas keeps falling. The next Fibonacci retracement level is at 2.42. That’s the 88.6% retracement measuring the full uptrend off the June 2020 low (not shown).

Measured Move Targets Lower

Also, a 100% projected measured move completes at 2.33. That’s where the price drop in the second leg down off the 10.03 swing high reached in late-August 2022 matches the price depreciation of the first leg down. The second leg down starts off the 7.60 swing high from last November. On the chart the measured move is marked with purple arrows pointing down. It represents one of the most common repeating patterns or fractals in the market and is sometimes referred to as a zig zag or lightening pattern.

Symmetry With Prior Market Moves

Technical analysts use the measured move pattern to identify symmetry or similarity between price swings. In addition to looking for a match with prior swings they will also look at Fibonacci projections of 127.2% and 161.8% to derive targets for the second leg swing from the first leg.

The total correction off the August 2022 high so far has been 7.42 or a 73.9% loss in 110 trading days. That’s a very rapid and sharp correction by any measure. Certainly, a sharp response once a bottom is seen may also occur. Once a reversal kicks in short sellers may be rapidly looking to cover. Therefore, keep an eye out for signs of a bullish reversal once support is found and holds.

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