Bulls and Bears Continue Fight Over Natural Gas: Outlook Not Promising

If today was the end of the week natural gas would be closing with a bearish doji shooting star candlestick pattern in its weekly chart. Even though the week is not yet complete, this pattern does not bode well for the bulls.

Natural Gas Forecast Video for 14.04.23 by Bruce Powers

False Moves Can Turn Quickly

Earlier in the week natural gas was able to rise to a three-week high (just barely) before meeting resistance. The fact that prices have since been knocked all the way back down to the low of the week following signs of strength, is bearish. A shooting star pattern is reflecting this dynamic of bulls dominating earlier in the one-week session. But they could not sustain the rally against the force of the bears, who were dominating by the end of the session. False moves many times can lead to sharp moves in the opposite direction. We’re not seeing that yet as support is still holding up.

Once Again Support is Tested at the Lows

This is the third week in a row that natural gas has tested support around the three-week low of 1.99. It reflects the continuing fight between the bulls and bears, with an obvious bias to the downside. A decisive decline below 1.99 points to further downside, yet a break below the February low of 1.97 would be needed to signal a bearish trend continuation. At that point natural gas first targets a prior support zone around 1.79. Further down are two Fibonacci extension levels. The first is at 1.68 from the 127.2% extension, and the second the 161.8% extension at 1.53.

Caution as a False Breakout Can Happen Again

Given the false breakout earlier in the week, future bullish signals need to be watched carefully for similar signs of failure. A daily close above a price level helps mitigate failure risk but may include getting in later than one might want. This week’s high at 2.25 and a three-week high will be the price level to watch on the upside. A move above it is bullish but a daily close above it confirms that strength and therefore makes it more likely that price can keep strengthening from there.

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