Natural Gas Forecast: Critical Support Tested, Bulls Eyeing a Comeback

Natural Gas Forecast Video for 23.11.23 by Bruce Powers

Natural gas reached a new retracement low today before finding support and bouncing right off the long-term uptrend line. An eight-week low of 2.82 was hit thereby returning the price of natural gas back to the October 3 low. The line is solid as it has six touches. This will be the seventh if it holds. Further, the significance of today’s low is enhanced by the fact it is also a monthly low from October as well.

In other words, there is a good chance we will continue to progress higher off today’s low given the more significant support level. If the bulls are to return, this is the spot to do it. On the other hand, a decisive drop and close below the line may indicate further weakness is afoot.

Bullish Indication Above 2.92

A bullish reversal is first indicated on a rally above yesterday’s high of 2.92. At that point, it looks like a bounce to test resistance around the 50-Day EMA is on the table. It is currently at 3.03 after failing its second test of support from the 50-Day EMA three days ago. Higher still is the 200-Day EMA at 3.17 and then the most recent swig high of 3.275.

Since the April trend low of 1.95 natural gas has been trending higher within a parallel trend channel. A solid advance off today’s low would provide evidence for possible continuation of that trend. Eventually a breakout of the pattern is likely if prices keep rising.

Downside Risk Remains

Despite the potential for a bullish continuation, downside risk remains. A drop below today’s low will trigger a breakdown of the uptrend line, the monthly candle and further fill the large gap from September 27. Price will have to be watched carefully to see the follow through behavior for indications for a bearish continuation. Although the 50-Day EMA has been trending higher the 200-Day line has a slight downward slope. This shows that, at least from the relative time perspective, downward pressure remains. A drop below today’s low signals a possible breakdown of the rising channel, which is also a large bear flag.

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