Remember When Natural Gas Was 1.15 in the Early 90’s….

• Posted by Greg Harmon
• on March 15th, 2012

Back on January 26th I speculated in this space about whether the bottom was in for Natural Gas or not (link below). The answer since the has been a resounding NO! as is sits back at the previous low near 2.24 trying to make a Double Bottom as shown on the daily chart below. But other than the prospect for a Double Bottom the daily chart points to even lower prices in the future. The consolidation is also a bear flag which would give a target of 1.70 if it were to breakdown lower. The Relative Strength Index (RSI) remains bearish and the Moving Average Convergence Divergence is

negative, although improving. The weekly chart does not give any reason to rush out to buy it either. After breaking down from an ascending triangle, retesting the triangle and failing, it has been moving lower. The target from the triangle break is 2.10, pretty close. But after moving lower from the peak at the retest at 3.95 to the symmetrical triangle it created centered on 2.50, the

move lower from the new triangle gives a target of 1.05. The bearish RSI and MACD that is negative and falling again do nothing to try to convince you a reversal is coming. Stepping back to the monthly picture is also a bearish view. Any number of Head and Shoulders Tops can be found but all are meaningless as they give a price objective of less than zero. The RSI is pointing lower as is the MACD, both supporting lower prices. The 2.10 target above sees some support from the 2001 to 2002 lows and 1999 before that. But a continued fall has support next at 1.63 and 1.35

before 1.16 and then the chart runs out. Suddenly that 1.05 target is not so outrageous. And look at the volume on this major move lower compared to what has traded at these levels in the 90’s. There is real conviction behind a move lower. Natural Gas will stop falling at some point but it does not look to be anytime soon.

Natural Gas May be Bottoming…or Not

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