Natural Gas Analysis: Bearish Signals Emerge as Key Resistance Holds

Natural Gas Forecast Video for 19.10.23 by Bruce Powers

As we head towards the final hours of today’s trading session natural gas is looking like it failed a bullish reversal from earlier in the day. It is set to close with a bearish inverted hammer candlestick pattern and possibly a doji inverted hammer. A breakout of yesterday’s high of 3.14 was triggered earlier in session.

Resistance Around the 200 Day EMA Leads to Intraday Pullback

Following the upside breakout natural gas quickly found resistance at the day’s high of 3.16. That high successfully tested the 200-Day EMA as resistance as price was rejected to the downside once approached. Similar price behavior within a trend generally signals a continuation in the direction of the initial trend, which in this case is down/retracement. Although the 200-Day line is at 3.18, today’s high was close enough particularly given the subsequent reaction as the price of natural gas continues to sell off from that high. At the time of this writing, it has almost made its way back down to the opening price of 3.06.

Support at 3.02 at Risk of Failing

Yesterday, support was seen around the prior swing high of 3.02 and the 50% retracement. That is a potentially important price zone as a successful test of that area opens the way to a continuation higher. However, today’s price action negates this potentially bullish scenario as the buyers have failed to sustain control and the sellers now have control as we head towards the close for the day. This means that sellers may retain control heading into Thursday’s trading session.

Lower Support Zones

A decisive drop below today’s low of 3.04 increases the chance that yesterday’s low may be broken to the downside. If it is, then natural gas next heads towards the lower support area that includes the 61.8% Fibonacci retracement at 2.90 and the previous swing high from June 28 at 2.88. The interim price level is the three-week low at 3.82. Lower down is a price zone around the 78.6% Fibonacci retracement at 2.75 along with the crossover of two trendlines at 2.72.

If natural gas falls to 2.72 it will be below the long-term uptrend line at the bottom of the trend channel. That line has represented dynamic support of the developing up trending channel since it formed. It should represent solid support again.

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