Bearish reversal on the weekly chart

A bearish trend reversal was triggered on the weekly chart earlier this week and it looks like it is now playing out. Additionally, natural gas remains below both its 50-day MA and 200-day MA and has additionally broken back below its 20-day MA today. If the 2.02 price area does not hold as support, a decline could be on the cards. It looks like the next lower price zone is between 1.95 and 1.92. The lower level is the 78.6% Fibonacci retracement level and the 1.95 level is the target of a falling ABCD pattern extended by the 161.8% ratio.

The overall picture remains optimistic

Despite short-term weakness, natural gas remains on track to continue rising after the correction is complete. It broke out of a falling bull wedge two weeks ago and then rebounded to a high of 2.30, above a previous swing high of 2.27. This rally also reclaimed the 20-day MA. The low of 1.88 on August 5 completed a 40.2% decline from the previous swing high of 3.16. In percentage terms, this decline exceeded all previous corrections from the February 2023 low, except for one. The decline from the January high to the February low was 55.1%.

The current correction is the first pullback since the bottom reversal since the low earlier this month. Once support is found, followed by a bullish reversal on a specific time frame (daily or intraday), there is the potential to lead to a resumption of the developing bull trend. Given the significance of the previous decline, there is also the potential for an upside reversal to surprise to the upside.

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