Bearish Pressure Looms: Natural Gas Nears Key Trendline Crossroads

Natural Gas Forecast Video for 23.08.23 by Bruce Powers

Natural gas dropped below the 12-Day EMA and internal downtrend line five days ago. It has been testing the two lines as resistance since then. It did so again today, with a high of 2.64. Resistance kicked in at that point leading to a decline to below yesterday’s 2.555 low. Natural gas is currently on track to close below yesterday’s low and has reached a low for the day of 2.54 at the time of this writing.

Downward Pressure Persists, Bearish Trend Signals

The relationship of natural gas to the 12-Day EMA trend indicator recently shows downward pressure remaining. One of the signs for a bearish trend continuation is for price to break below a marked support level that is subsequently tested successfully as resistance. This is typical price behavior during the progression of a downtrend. Further confirmation of weakness is then watched for. Today, another sign of weakness occurred with the drop below yesterday’s low. The next confirmation would be on a daily close below yesterday’s low. As noted above, that looks likely to happen today.

Support at 2.52 Held, Confirms 88.6% Retracement

Nevertheless, natural gas has held above support at 2.52, which was confirmed last week. That low completed an 88.6% Fibonacci retracement, as well as a falling ABCD pattern. Although natural gas has not rallied following that low but rather has gone relatively sideways instead, it remains in a constructive uptrend in the bigger picture. That may be about to change soon.

Symmetrical Triangle Pattern Completion Imminent

You can see how price is now sandwiched between two trend lines. One rising and one falling. The two lines create a symmetrical triangle type pattern that reaches its completion tomorrow. This means that natural gas has about one more day to trade within the lines without breaking through one of them. Baring a failed breakout, the line that is broken will provide a clue as to the next direction. Either a continuation lower to again test support (watch the uptrend line) or an upside breakout that could put natural gas back above the 12-Day EMA and downtrend line. The 12-Day line is now at 2.64, while the five-day high is 2.67. A break above the 12-Day line shows strength but it is better confirmed on a daily close above the five-day high rather than the 12-Day line, alone.

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