Analyzing Natural Gas: Retracement, Support Zones, and Bullish Signals

Natural Gas Forecast Video for 18.07.23 by Bruce Powers

Monday saw natural gas test support with a low of 2.48. That was right in a support zone that includes the 50% retracement at 2.51 and the 127.2% extension of an ABCD pattern at 2.50. Downward pressure remains as natural gas trades near the low for the day. If the retracement continues, the next lower support zone is around 2.42 to 2.40 and consists of the 61.8% retracement, and the completion of a falling ABCD pattern extended by 161.8%.

Closes Below 34-Day Line for Second Day

Unfortunately for the bulls, natural gas is on track to close below the 34-Day EMA, now at 2.54, for the second time today. This is a sign of further weakening that increases the chance for a continuation of the retracement to the next lower support zone.

The current retracement is already different than the previous two as it has gone on longer. The current retracement is on its 12^th day, while the two before lasted only eight and five days. A new falling ABCD pattern has been added to the chart considering the most recent price action that created a new lower swing high during the correction. The initial target from this pattern is 2.41 and further confirms the significance of the next lower support zone. You can see how if it is hit support of the uptrend line will be close by as well.

Upside Signal Above 2.58

On the upside, a breakout above today’s high of 2.58 is bullish and the first sign of a possible bullish reversal. On a relative basis the current retracement still shows relative strength when compared to the previous two corrections. The first found support around the 78.6% retracement and the second around the 61.8% retracement. To date, the current retracement is showing relative strength if price turns higher off the 50% retracement zone. The more significant barrier is the most recent swing high at 2.75. Once that is exceeded to the upside, the falling trend will be violated with a bullish signal.

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