Oil & Gas - Energy - Commodities - Resources (OILBRENT)

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Natural Gas Potential Retreat or Further Rally Ahead?
By: Bruce Powers | May 10, 2024

• Natural gas surged to new highs before meeting resistance, with potential for a retreat or further rally depending on key support and resistance levels.

Natural gas rises to a new trend high before hitting resistance at 2.34, the high for the day. It sold off from there intraday and is trading near the lows of the day at the time of this writing. Today’s high was a little shy of the next potential resistance zone, which begins at 2.37. It put the price of natural gas 48.1% above the April 25 swing low at 1.58.

Thursday was a wide range day and a little pause in the ascent is to be expected. It remains to be seen whether today’s high leads to a deeper retracement and it won’t be apparent unless yesterday’s low of 2.15 and the five-day low of 2.13 are broken to the downside. Until then the possibility of testing higher price levels remains.



Upside Target at 200-Day Moving Average

The 200-Day MA is at the top of the next higher price range at 2.46, along with the 50% retracement. These indicators themselves provide a realistic higher target for the current rally. However, there are several other factors that point to a price range from 2.37 to 2.46 as being significant. This doesn’t mean that higher prices are reached, but they could be. The 2.37 price level is identified twice. It is an initial target derived from measuring the bottom symmetrical triangle that natural gas broke out of on April 26. Also, a rising ABCD pattern with the CD leg extended by 161.8% of the AB leg completes at that price.

Measured Move Targets 2.40

There is also the completion of a measured move at 2.40. The measured move identifies price symmetry with the last large rally that began from the December swing low. During that advance the price of natural gas increased by 51.8%. On a percentage basis the current rally will match at 2.40. Again, this doesn’t mean it will be reached but when there are five indications identifying a similar price area, some attention is warranted.

Weekly Close May Provide a Clue

Since the week is about to end, the closing price relative to the week’s trading range may provide some guidance. In general, the higher natural gas closes above the halfway point of the weekly range, the stronger the close. The halfway point is at 2.24. Also, this week’s low of 2.13 is a key pivot level as it is a third sequential higher weekly low.

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