Price Action Analysis: Natural Gas Poised for Continuation Higher

Natural Gas Forecast Video for 08.06.23 by Bruce Powers

Natural gas is following through from the bullish setup discussed in yesterday’s column. Today, it broke out above the downtrend line, rallied above the 34-Day EMA, and advanced to a five-day high. Also bullish, natural gas is on track to close at a six-day closing high. Further, notice that the day is likely to end with a long green candle and a close near the high of the day’s range. That is the type of price action we want to see on a breakout.

Bullish Long Green Candle Today

Today is on track to complete the longest green candle for natural gas since it approached the last swing high on May 18. This behavior confirms the recent swing low bottom at 2.14, opening the door for a continuation higher.

New Rally Has Begun

Given today’s price action, it looks like natural gas is starting its third rally off the 1.95 trend low reached April 14. Since that low, natural gas has been rising within a parallel trend channel. That channel reflects some degree of symmetry within the advance. There is also symmetry between the two prior rallies, which could lead to insights into the current rally. The first rally off the April 14 low was 29.7% in 10 days and the second saw a 32.2% advance in 10 days. Performance based on both price and time are close to each other. Therefore, it is reasonable to anticipate the possibility of a similar minimum move during the current advance.

Symmetry with Prior Advances

Let us consider the possibility that the current rally would reach at least a 29% advance off last week’s low of 2.14. That will occur if natural gas hits 2.76. It turns out that 2.76 is only 0.01 below the first major target range for natural gas highlighted in red on the chart. That potential resistance zone starts around 2.77 and goes up to 2.83. Remember, a 29% advance is being used to help find a minimum target for the current rally, so it fits with the resistance zone marked previously. If the current rally also completes in 10 days, we could see price accelerate as there are six days left to match the time of 10 days for the advance.

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