The 02/12/23 blog “Natural Gas Bottoming Signals” illustrated evidence from all four market dimensions that Natural Gas could be forming a major bottom. Elliott wave analysis now indicates a major bottom may have been made on 02/17/23.
Natural Gas (NG1!) weekly continuous futures chart courtesy of Trading View illustrates the long- term Elliott wave count.
The bull market from June 2020 to August 2022 took the form of an Elliott Impulse wave, followed by what so far looks like an Elliott wave Zigzag corrective pattern. The bull market lasted 113 – weeks, the bear market 25 – weeks. 25/113 equals. .221 which is close to the Fibonacci ratio of .236.
Markets remember their price structure and are likely to have significant bottoms in the area of prior major lows. The bottom for Primary wave “2” was at 2.238. The low for “NG1!” on 02/17/23 was 2.22, a difference of only .018 – amazing!
The daily “NG1!” chart examines the bear market Elliott wave count.
Within a Zigzag pattern the most common Fibonacci relationship is for wave “A” to equal wave “C”. For the Natural Gas bear market, the presumed Primary wave “A” was 5.278 points. The decline from Primary wave “B” to the 02/17/23 bottom was 5.384 points, close to equal of Primary wave “A”.
The decline from Primary wave “B” could be a five-wave Impulse pattern. Within Impulse waves the 2nd wave usually has deep retracements while the 4th wave has shallow retracements. The reason is because when a market reaches the area of where a 4th wave could develop, the crowd recognizes the direction of the main trend and are reluctant to fight the trend.
In the Natural Gas bear market the presumed wave (2) has a deep retracement the presumed wave (4) is shallow.
The hourly “NG1!” chart provides additional evidence that the shallow retracement was probably wave (4).
The structure from 02/03/23 to 02/16/23 appears to be an Elliott wave – Horizontal Triangle. This pattern only forms in the 4th wave position of motive patterns. There are usually Fibonacci relationships among the sub waves of Horizontal Triangles.
In this case the relationships are: Wave “A” equals wave “B”.
Wave “D” is .618 of wave “B”.
Wave “E” is .382 of Wave “A”.
After completion of a Horizontal Triangle there’s usually a thrust in the direction of the main trend which in this case is down, and that’s what happened.
Sometimes the length of the post triangle trust can be measured. This is done by measuring the widest part of the triangle and adding or subtracting this measurement from the termination point of wave “E”. For this Horizontal Triangle the widest part is wave “A” which was 3.16 points. Subtracting this from the end point of wave “E” at 2.559 targets a termination point for the post triangle thrust at 2.243 the low on 02/17/23 was 2.22, a difference of only .023.
The 15 – minute “NG1!” illustrates additional evidence that Natural Gas may have made a major bottom on 02/17/23.
A post triangle move will take the form of either an Elliott wave – Ending Diagonal Triangle or an Impulse wave. In this situation the move down took the form of an extended Impulse wave.
Also note the bullish momentum divergences on the MACD – Histogram and the RSI.
The tremendous amount of four-dimension evidence presented in the 02/12/23 blog, combined with detailed Elliott wave analysis strongly indicates a major Natural Gas bottom may be in place on 02/17/23.
Natural Gas seasonal patterns are bullish until June.
Four Dimension Trading 