Natural Gas Forecast: Signs of Strength Amidst Consolidation

Natural Gas Forecast Video for 04.10.23 by Bruce Powers

Natural gas pulled back further today before finding support at the day’s low of 2.82. The decline completed a 38.2% Fibonacci retracement at 2.83 and the low of the day successfully tested support of the internal downtrend line as price was rejected off the line to the upside. The low of the day was an exact touch of the downtrend line. Subsequently, natural gas rallied off support and is on track to close green and strong, at the high end of the day’s range.

Consolidating Near Highs

Five days of consolidation near the top of the current rally is a sign of strength. The retracement to date has been minor as buyers stepped in today off the minimum 38.2% Fibonacci retracement. Moreover, the internal downtrend line previously marked resistance of the recent retracement. As of today, it was confirmed as support.

Today’s short-term bullish price action is encouraging for the bulls as it could complete the current pullback/consolidation. Further signs of strength are needed though. Given that natural gas has traded within a relatively tight range for the past five days, an advance above the recent trend high triggers a bull trend continuation and should provide confidence that natural gas is ready to continue to trend higher.

Three Upside Targets

There are three potential targets on the enclosed chart if natural gas does trigger a bullish continuation. The first is obviously the previous trend high at 3.02. That price level was almost exceeded with last week’s 3.00 high, but not quite. That target is followed by 3.06, which is the 127.2% extended target for a rising ABCD pattern. In this case, the CD leg of the pattern is derived by multiplying the price appreciation seen in the first AB leg up by 127.2%.

Once the pattern target is hit, resistance may be seen leading to a retracement or a breakout above the 3.06 price level, providing a new sign of strength. Finally, if natural gas continues to strengthen it has a good chance to eventually reach the 200-Day EMA, now at 3.18.

Long Term Charts Bullish

As noted previously, the weekly chart is supportive of a continuation higher in natural gas. Last week’s close was the highest weekly close in 29 weeks. In addition, on the monthly chart a bullish trend continuation triggered last month.

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