Natural Gas – Weekly Analysis

CANDLES

For several hours on Friday, Natural Gas flirted with a close below the prior week’s open, attempting a weekly Bearish Engulfing. In the end, bulls pushed back and the week finished with a bearish Harami—less bearish and requiring strong confirmation. The daily and 3D frames closed with bearish candles, so the odds of lower prices early next week are high. At the same time, the 15D frame closed with a spectacular bullish Tower Bottom, signaling higher prices down the road with high probability.

In this conundrum, the most probable path is a limited move lower, followed by a reversal that prevents the weekly from flipping bearish—potentially a weekly consolidation around the 200 WMA before the next leg higher.

Short-term: bearish
Mid-term (weekly): neutral, pending confirmation
Long-term (monthly): bullish

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 yet.

Last Wave

The current wave down (chart insert) is highly likely corrective. While it can extend lower—waves c of abc corrections can reach 2.0–2.618–3.618 and even 4.618—the key level to watch is $3.444. A break below $3.444 would invalidate the i–v impulsive structure.

SUMMARY:

Natural Gas closed September with several convincingly bullish signals and reinforced its long-term prospects with a constructive 15D close this week. While the long term is bullish, the short/mid term shows weakness that is likely to be short-lived. Natty is possibly working on an impulse of a higher degree which, if successful, would begin the path to double digits, as discussed earlier.

Short term: bearish
Mid term: neutral, pending confirmation
Long term: bullish

Happy Trading!