Natural Gas Price Forecast: Breaks Support, Eyes Deeper Bearish Retracement

Natural gas fell hard through a support zone on Monday that was established by an area of confluence defined by an uptrend line and the 20-Day MA. The 20-Day MA was initially breached last week with Friday’s daily close below the 20-Day line, and just at support of the uptrend line.

Clearly the market for natural gas seemed to recognize that price zone given the sharp drop seen today on a breakdown. Something to consider on the way back up. For now, it looks like natural gas is heading for a deeper bearish retracement. It continues to trade weak today, near the lows of the day, at the time of this writing.

Lower Price Levels

There are several lower price levels to keep an eye on where support may eventually be seen. The maximum for the bulls would be a test of support around the 200-Day MA, currently at 2.25. The 200-Day line was recaptured in early-September leading to an accelerated advance that culminated with the recent swing high of 3.02. This would be the first pullback towards the 200-Day line following the recent advance. Therefore, the 200-Day line has a good chance of marking the maximum low-price zone for the current retracement.

Breakdown Points to Lower Prices

Today’s decline took natural gas below the 38.2% Fibonacci retracement at 2.58, which was near last week’s low. It most likely leads to a test of support around the 50% retracement at 2.45, at a minimum. That price level should be considered along with a prior interim trend high at 2.44. Further down from there is the 50-Day MA, now at 2.37. Moreover, consider the 50-Day line to begin a potential support zone down to the 200-Day MA. However, in between those two moving averages is the 61.8% Fibonacci retracement at 2.31. The 2.31 price zone is also indicated as a potential support area by the mid-August swing high at 2.30.

Bigger Picture – Consolidation

In the bigger picture, natural gas remains within a large symmetrical triangle pattern that defines a consolidation range. A failed bullish breakout attempt occurred in the most recent rally that ended at the recent high of 3.02. However, since a consolidation triangle exists, there is always the possibility of an eventual test of support at the lower boundary line of the pattern.

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