Natural Gas Price Analysis: Key Levels to Watch Amidst Retracement

Natural Gas Forecast Video for 18.10.23 by Bruce Powers

Natural gas continues to retrace its prior advance today with a drop to a low of 3.02. Today’s decline successfully tested support around the prior swing high of 3.02 (now potential support), leading to an intraday bounce. The 3.02 price support target is strengthened by the 50% retracement, which also identifies that price area. A bullish reversal off today’s 3.02 low will be bullish if it occurs as a retracement of 50% still indicates underlying strength in natural gas. This would be a logical place to find support that stops the decent.

No Sign Yet That Retracement Over

Nonetheless, there is no sign yet that the retracement is over, so today’s low provides near term support. A break below it starting tomorrow triggers a likely continuation of the retracement. Subsequently, the 61.8% Fibonacci retracement will be in line at 2.90. Further down is the 78.6% Fibonacci retracement at 2.75.

Reaching the 78.6% level will put natural gas into its gap from late September. The gap fills at 2.67. However, there are two trendlines to contend with in the 2.75 area. An uptrend and downtrend line cross at 2.72 and point to another potential support zone. It can be used together with the 2.75 price level to create an area of support. The lower trendline should continue to hold as support, particularly since it is drawn connecting six points. Therefore, we will be watching the price behavior of natural gas carefully if the 78.6% retracement zone is approached.

Further Attempts to Break Above 200-Day EMA Likely

Further attempts to rise back above the 200-Day EMA are likely once the current retracement is complete. Last week was the first bullish breakout since December. The 200-Day line was breached to the upside last week for six days until yesterday when natural gas fell below it again. Up until last Friday, it had been trading below the 200-Day line since mid-December 2022. Last week was the first advance to the line since December. It therefore seems likely that another attempt will be made. Since the first attempt was successful for a short time, the next attempt should show signs of greater strength if it is to be successful.

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