Natural Gas Technical Analysis: Bear or Bull?

Natural Gas Forecast Video for 05.04.23 by Bruce Powers

Further consolidation in natural gas is probably not a surprise to anyone. Natural gas remains stuck within last week’s range as it further tests support near lows. The current trend low is at 2.00, while the previous trend low is at 1.97. Until shown otherwise, natural gas is pointing lower.

Nevertheless, the next bear signal will occur on a drop below 2.00, followed by a continuation below 1.97. A drop below 1.97 followed by a daily close below that price level, triggers a bear trend continuation. Until then there remains the possibility of a bullish reversal. This is not an endorsement of that scenario, just that we need to keep in mind the possibility of it. When a pattern looks so obvious, but it is not dropping, the alternative also needs to be considered.

Bullish Reversal Possibility Due to Bullish RSI Divergence

Further, the 14-Day relative strength index (RSI) momentum oscillator is showing a bullish divergence with price. It is above a trend line with higher swing lows, while price is still in a clear downtrend. Such divergence just tells us to be on the lookout for a possible bullish signs. Given the daily choppy consolidation phase over the past 10 days of so, a signal from the weekly chart will provide a more indication as it a longer time frame chart.

Last Week Formed Bullish Hammer Candle

Last week, natural gas completed a potentially bullish green hammer candlestick bottom. However, until it triggers it is not confirmed. So far this week natural gas has remained inside the range of the hammer. An upside breakout triggers above last week’s high of 2.24. At that point we need to see how natural gas behaves. Does price accelerate to the upside or quickly fade out?

Upside Targets to Watch if Natural Gas Turns Up

There is plenty of upside if natural does reverse higher. Initial Fibonacci retracement targets are on the chart, while the more significant price area will be around the recent swing high at 3.03. That high is very close to the completion of an ABCD pattern where the second leg up off the bottom matches the move of the first leg up. That match occurs at 3.06.

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