Fibonacci Confluence on the Radar

Next, watch the approaching Fibonacci confluence zone from 2.68 to 2.70. The price of natural gas may get there quickly as it is on track to end the week near the highs of the week, and bullish momentum has accelerated as seen in Friday’s wide price range and strong green candle. Further up is the top line of a declining blue dashed trend channel, as well as the 78.6% Fibonacci retracement at 3.00.

Caution Warranted as Natural Gas Further Extends

This looks like a swing back rally in response to the sharp decline from the January 12 swing high of 3.38. Natural gas fell by 1.86 or 54.9% in 25 days, finding a bottom at 1.52. Since the subsequent swing low at 1.58 (C) the price of natural gas has risen by as much as 65.3% as of today’s high. The relative strength index momentum oscillator (RSI) continued to rise today and reached a height not seen since the peak in April 2022.

That peak was followed by a quick 21% decline to the 38.2% Fibonacci retracement. If a similar scenario were to unfold with the current rally, natural gas would complete a 38.2% retracement at 2.23. That is assuming that 2.64 turns out to be a swing high. On the other hand, if the retracement began from the top of the upcoming resistance zone at 2.70, a 38.2% retracement would put natural gas around 2.28.

For a look at all of today’s economic events, check out our economic calendar.