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Natural Gas Price: Is the Rally Over?

Two weeks ago, on September 13th, the price of natural gas was hovering around $2.83, following a decline from as high as $2.996. Fortunately, the Elliott Wave Principle helped us recognize the fact that the recent weakness was nothing more than a temporary pullback within a larger bullish setup. So instead of joining the bears near $2.83, we decided it was a good time to go with the other team, whose initial target was the $3.000 mark. The chart below, included in our last update on natural gas prices, was the very reason for our optimism.
natural gas prices Elliott wave forecast
It revealed that the rally from $2.704 to $2.996 was a textbook five-wave impulse, which means the larger trend was pointing north. The decline to $2.759, on the other hand, had a three-wave structure, labeled A-B-C. Taken together, these two patterns formed a complete 5-3 wave cycle, which meant that the bulls “can reach the $3.000 mark from now on and even shoot for $3.1000, as long as the price of natural gas stays above the bottom of wave C at $2.759.” Two weeks later today, it is time to take another look.
Natural gas prices Elliott wave analysis
The bulls almost looked doomed at first as natural gas fell to $2.767 the next day. However, $2.759 survived and the following sharp recovery generously rewarded our patience. It took natural gas prices to the $3.000 mark on September 20th and to $3.088 five days later.

As of this writing, the price is hovering slightly below $3.000 and seems to be trying to turn the recently breached resistance into support. Keeping in mind that a five-wave impulse has to emerge from the bottom at $2.759, chances are good that another upswing to $3.100 is around the corner in wave 5.

After that, however, a bearish reversal should be expected, since every impulse is followed by a three-wave correction in the opposite direction. Whether it will be just a small pullback or a larger decline is yet unknown, but traders should know that the price of natural gas carries a lot more risk for their long positions now than it did two weeks ago near $2.830.

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