Natural Gas Price Forecast: Breakdown Signals Lower Targets

The 200-Day MA failed to hold as support on Tuesday as natural gas broke below it to reach a low of 2.415 for the day. It is on track to close below the 200-Day line as well. In addition, the prior swing low of 2.47 from May 28 was broken to the downside triggering a bearish reversal. This puts the next lower target zone of 2.37 to 2.34 in line as a downside target. The price zone is comprised of the 50% retracement of the full upswing and the completion of a descending ABCD pattern, respectively. As of today’s low, natural gas was down by 23.6% from the June peak.

200-Day Line Fails to Hold as Support

Both the long-term 200-Day MA and intermediate 50-Day MA failed to stop the descent in the price of natural gas. And it is on track to close clearly below the line today. This increases the short-term bearish outlook and the chance to reach lower targets before the retracement is complete. Below 2.34 begins a price zone from 2.235 to around 2.18.

Nonetheless, this does not mean that natural gas continues straight down as it has the past several days. A bounce is coming sometime. If it comes soon, the first sign of strength would be on a rally above today’s high of 2.48. Potential resistance around the 200-Day MA at 2.47 and the 50-Day line at 2.49 should also be considered, followed by this week’s high of 2.60.

Result of Failed Trendline Breakout

Natural gas is reacting to a failed trendline breakout that began in early-June. It was able to stay above the long-term downtrend line for only four days before it succumbed to selling pressure. Bearish implications were confirmed today with the drop below the 200-Day line. This means that the recovery could take some time.

Possible Time Symmetry

Let’s quickly analyze the timing of the current retracement. As indicated above, it takes the shape of a falling ABCD pattern. The AB decline of the pattern occurred in eight days while the current CD down leg is now in its fourth day. Will a retracement low be reached after an eight-day decline for the CD leg of the pattern? If it does, time symmetry will be represented. As with price, once swings match in time a potential pivot point has been identified.

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