Natural Gas at Crossroads: Balancing on Support, Eyeing Bullish Signals

Natural Gas Forecast Video for 17.11.23 by Bruce Powers

Natural gas has failed so far to follow through on an advance from recent support. Again, today it tested support around the 78.6% Fibonacci retracement, the internal uptrend line, and the 50-Day EMA. The possibility of a bullish reversal is dampened by the relatively tight consolidation that has been forming near that support zone. This type of price behavior following a potential bottom continues to put the reversal at risk of failure. Nevertheless, for now it continues to hold prices up and the possibility of a resolution to the upside remains.

Trend Structure Points to Higher Prices

Even though natural gas fell to a four-day low of 3.03 today before bouncing, the possibility of it closing above the 50-Day line at 3.06 remains. At the time of this writing, it is very close to doing so. The market remains structured to go higher unless there is a decisive decline below the recent 2.99 swing low. A daily close below that price level would confirm weakness, while a quick reversal to back above the 50-Day line signals strength and a likely flush out of weak holders.

Weekly Pattern End Bearish

Of concern is the candlestick pattern developing on the weekly chart. There is one more trading day left to the week and natural gas is showing a bearish inverted hammer pattern. Heading into next week the pattern would trigger on a drop below this week’s low, whatever it ends up being. The pattern is potentially bearish because price needs to drop out of the pattern before being valid.

Following a drop below this week’s low, if it does happen, natural gas would be heading towards a potential support zone from around 2.90 to 2.86 consisting of prior swing highs and lows. Also, there were four weekly highs in the past several months that hit 2.87 to 2.86. In other words, that should see strong support.

On the Upside

On the upside, a bullish breakout is triggered on a move above this week’s high of 3.275. Ideally, momentum subsequently starts to accelerate. Such a move would go far in confirming strength seen in the rising slope of the trend.

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