Natural Gas – Quarterly Review

CANDLES

This was written in the weekly on September 20: “With all respect to the big drop over the last two days, I think NG is set for a sizable bounce. None of the short-to-mid frames—from the daily to the 10D—managed to confirm a bearish reversal or negate the previously established bullish odds. The only frame that printed a bearish signal was the 15D; we’ll keep that bias in mind for the next 15 trading days, though the picture could change with the monthly print, which falls mid-cycle in the next 15D period.“

Indeed, the candles sensed it and predicted the turn. Natural Gas closed September with a spectacular Tower Bottom on the monthly and kept the odds leaning bullish on the quarterly frame. Technicals made a 180-degree turn in the final week and are now aligned to support a rally from here.

Classical Pattern – IHS

This NG1 monthly chart, with a clearly visible, gigantic Inverse Head & Shoulders, has a fair chance to complete over the next few months. In 2021–2022, a very similar pattern, after confirming the right shoulder, triggered a 250% rally. I’ve marked prospective targets at 1x, 2x, and 3x of the typical IHS run. It appears Natty is at the beginning of a magnificent rally, a view that aligns well with the Elliott Wave projections we’ve been discussing.

ELLIOTT WAVES

Mid Term

As I discussed earlier, investors should be prepared for a 70–140% rally over the next few months/quarters. No change to this hypothesis.

Last Wave

SUMMARY:

Natural Gas closed September with several convincingly bullish signals, opening a potential path to double digits, as noted last week. The mid-term frames are still developing and have a good chance to align with the larger ones. Natural Gas appears on track to raise heating costs over the next 1–2 years.

Short/mid-term: moderately bullish.
Long term: bullish.

Happy Trading!