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

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Natural Gas Buyers Likely to Drive Prices Higher
By: Bruce Powers | March 14, 2024

• Despite resistance zones, a breakout above the recent swing high could lead to further gains, with a first higher target around 2.13.

Natural gas may have completed a bottom for the retracement today with a new pullback low of 1.65. Although the 78.6% Fibonacci level at 1.63 was not reached today’s price action indicates a possible switch from the sellers being in charge to the buyers taking control of price action. There is an increased likelihood of a rally off today’s low. Yesterday’s high of 7.72 was exceeded as a high of 1.76 was reached today following a drop to new trend lows. That high is at the time of this writing, and it may be higher by today’s close. A daily close above yesterday’s high will be a slightly more bullish indication than a close below it.



Signs of a Bottom and Bullish Reversal

Today is the first day of the retracement where the price of natural gas exceeded a prior day’s high, which is a sign of strength. It sets up a potential rally that has the potential to breakout above the recent 2.01 swing high. This scenario is supported by the behavior of the 8-Day and 20-Day moving averages.

The 8-Day line crossed back above the 20-Day line on March 4 for the first time since late-January, and it stayed above it during this current retracement. If the scenario plays out the first higher target looks to be around 2.13. That is where a rising ABCD pattern utilizing today’s low would hit its first target (see chart).

Resistance on the Way Up

Nonetheless, there are price areas of concern on the way up. First, is the price zone around the recent swing high. It stopped the ascent and led to a retracement. That zone is derived from previous long-term support zones (now resistance) from 1.95 to 1.97. Further, it is in the area represented by the lower blue dashed trend channel line.

The recent swing high hit resistance very close to the line and it could do so again. Notice that the line represented support on December 12 and then resistance in early-February and most recently. In other words, the market has clearly identified this line. Therefore, it could represent resistance once again. In addition, a decisive breakout above the recent swing high would have the added significance of breaking through the trendline.

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