Is Natural Gas Set Up For Another Rally Attempt?

Recent downward price trends in natural gas have set up a nearly perfect 100% price contraction equal to the price contraction from the highs near late August to the lows in late September – totaling $0.95.

The current highs near early November ($3.393) to the recent lows ($2.381) represent a $1.012 range – a 106.52% expansion of the August~September price contraction. We believe natural gas may be setting up another “100% Measured Move” price structure where a new upward price rally may push natural gas price levels above $4.15 in the near future.

Natural Gas 100% Measured Move Setup

The upside price move highlighted on this weekly chart (the orange line) shows a 125% Fibonacci Price Expansion of the previous upward price trend from the lows near mid-June to the highs in late August. If another rally were to take place similar to this 125% range expansion from the current lows, the upside price target would be somewhere near $4.15 to $4.25.

Our analysis of natural gas forecasts that a nearly perfect 100% Measured Move price contraction is taking place, which may prompt another 100% Measured Move price advance equal to the previous price advance – equaling a $1.90+ price advance targeting $4.15 to $4.25.

Historically, January and February are predominantly bearish for natural gas. Over the past 25 years, natural gas has only moved higher in January and February in nine or ten of those years. Therefore, any upward price move in natural gas after the end of 2020 would be somewhat of a price anomaly. 

Having said this, the largest monthly advance in January for natural gas is $1.37, and $2.49 for February. If an anomaly were to happen in late 2020 or early 2021, natural gas would find support above $2.35 and begin to advance higher, setting up the 100% Measured Move structure, before advancing towards $4.00 or higher as price accelerates within this trend.

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