Natural gas: head and shoulders top pattern; $5 in sight?

US natural gas prices have formed a head and shoulders top pattern, which may signal a weakening of the current major bullish trend and a subsequent reversal into a bearish one.

The left shoulder coincided with the relative highs at the end of July at $9.30/MMbtu, a level that was then followed by a pullback to $7.53 (August 8) prior to the beginning of a new rally toward the head at nearly $10.

The right shoulder was formed by the decline from $9.97 to $7.80, followed by a brief rebound at $9.22 and another decline to the current $7.86.

Although a brief breakdown was seen in the September 19 session, natural gas is now testing the neckline of the head and shoulders pattern. If confirmed, we could see a return to the level of $5.30, which were hit in early July 2022.

Additional bearish technical signals for the price of US natural gas include the MACD oscillator dipping below the zero line and the RSI slightly pointing south.

Idea written by Piero Cingari, forex and commodity analyst at


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