Natural Gas Price Forecast: Correction Targets Key Fibonacci Levels Amid Further Weakness

Natural gas moved into corrective mode on Thursday as it fell below Wednesday’s low of 2.77 and dropped to 2.69 before finding support. The decline follows a successful test of resistance at the top trendline of a large symmetrical triangle pattern. A deeper retracement is likely given the decisive decline seen today. Although natural gas bounced off the day’s low of 2.69 it remains under pressure. The intraday bounce has struggled to advance more than about a third of today’s trading range and it looks likely to close weak, in the lower half if not third of the day’s trading range.

Next Lower Target is 2.65, Followed by 2.58

The next lower target is the 38.2% Fibonacci retracement at 2.65. A decline below today’s low will signal a likely move to that price level. Nonetheless, a lower and what looks like a potentially more significant target zone is from 2.58 to 2.55. That range consists of a previous interim swing high and the 20-Day MA, respectively. Also, within that range is the 50% retracement level at 2.57. If that price zone is broken to the downside, then watch for support around the 61.8% Fibonacci retracement at 2.48, along with the 50-Day MA at 2.45.

Successful Test of 200-Day MA is Bullish

Recently, natural gas successfully tested the 200-Day MA as support. The 200-Day line was recaptured on September 11. Other than a quick test of support a week after the initial breakout, there has been no subsequent test of the 200-Day line as support. It can be considered as a maximum support level before the potential of natural gas in the foreseeable future starts to change. Staying above the 200-Day line during weakness would indicate strength overall given its long-term nature.

Higher Swing Lows Point to Underlying Strength

Moreover, notice how bullish momentum has been improving overall in recent months as represented by the higher swing lows and accompanying trendlines. If the higher internal trendline that connects the recent swing low fails as support, the potential for an eventual bullish breakout of the triangle diminishes or it may take longer to occur. The top triangle trendline is significant as it connects five swing highs. This means it may continue to offer strong resistance, or a bull breakout triggers with momentum spiking – a possibility.

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