Technical Analysis of Elliott Waves for Natural Gas (Video)

Elliott Wave Analysis for Natural Gas

Natural gas is currently recovering after a significant downtrend in 2024. However, this downtrend is likely to intensify in the coming weeks. After a strong rebound from the February 2024 low, natural gas has given back more than two-thirds of those gains, suggesting a possible return to the 2020 lows. The overall trend has been bearish since August 2022, and although a short-term recovery began on August 5, it is likely to be temporary. Sellers could regain control later in the month or in early September.

Daily chart analysis

On the daily chart, the decline from the $10 high in August 2022 is developing as a corrective pattern called waves abc of the cycle degree. Wave a ended at 4.77, followed by wave b which ended at around 7.61. Since November 2022, wave c has been unfolding as an ending diagonal pattern. Currently, the 5th leg (wave 5, circled) is underway within this diagonal, and it is expected to continue lower in a three-wave structure. This move is likely to break below the 3rd wave low (wave 3, circled) at 1.524, suggesting further downward movement before the pattern is complete. The 5th wave (circled) of c of (y) is expected to develop into a three-wave structure, which is more clearly visible on the H4 chart.

H4 chart analysis

On the H4 chart, the price has completed wave (A) of 5 (circled) and is currently correcting higher in wave (B). Once wave (B) is completed, the price is expected to continue its decline in wave (C). However, wave (B) is not yet complete, so the commodity favors an upside move in the short term.

Diploma

Natural gas is in a complex corrective phase, with potential short-term gains likely to give way to a continuation of the broader downtrend. Elliott Wave analysis suggests that while brief price increases may occur, the overall outlook remains bearish and further declines are expected once the current corrective wave (B) is complete. Traders should approach the temporary recovery with caution and prepare for potential downside as the broader downtrend reasserts itself.

Technical Analyst: I am Sanmi Adeagbo.

Elliott Wave Analysis for Natural Gas (Video)