Natural Gas Bounces at Key Support: Will it Continue to Strengthen?

Natural Gas Forecast Video for 28.07.23 by Bruce Powers

Natural gas accelerated its retracement today before finding support at a low of 2.55. The drop completed a 78.6% Fibonacci retracement before bouncing. During the decline the uptrend line and 34-Day EMA were busted to the downside, but price was quick to recover. At the time of this writing natural gas is set to close back above both those lines as well as support of the small internal falling line.

Watching the 34-Day EMA

The relationship to the 34-Day EMA is key here as natural gas should be showing continued signs of strengthening relative to the 34-Day line, if it is to have a chance of proceeding higher in the relatively near-term. Today’s bounce off the 78.6% price zone is the first step in finding a bottom to the pullback. Next, we need to see further confirmation of support and signs of strengthening. First, we look for an advance above today’s high of 2.61. Subsequently, natural gas would need to close above the 100-Day EMA, which was resistance for the prior five days. Each day prices got above the line but could not close above it except for the first day. Currently, the 100-Day line is around 2.74.

Long-Term Weekly and Monthly Insight

Let’s also look at the longer-term charts, the weekly chart and monthly chart (not shown). For the weekly we assume that this week is complete (only one more day). This week’s high is 2.77. A rise above that price level triggers a weekly breakout of an inside week. Only the monthly chart we have an inside month. It will be completed on Monday, only two trading days away. Once completed, a monthly breakout signal occurs on a move above June’s high of 2.79.

Does Today Complete the Correction?

Does today complete the correction? It certainly might. What happens next will provide more clues. Ideally, going forward natural gas trades above the uptrend line and 34-Day EMA. If a decline occurs support is seen above or on those lines. Subsequently, bullish breakout above resistance levels noted above needs to occur.

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