Natural Gas Price Forecast: Faces Bearish Reversal Amid Market Pullback

Natural gas is on track to end the week in a bearish position, closing near the lows of the week. Selling continues to dominate at the time of this writing as trading persists near the lows of the day. The week is set to end with a bearish shooting star candlestick pattern on the longer time frame weekly chart. And on the daily chart natural gas is next primed to test support around the 20-Day MA, currently at 2.10.

Bearish Weekly

A daily bearish shooting star pattern triggered today on a drop below Thursday’s low of 2.19. Thursday’s rally tested resistance around the July swing high as natural gas reached 2.27. But it quickly encountered resistance that led to the weekly shooting star candle. This is a normal and typical pullback as the first rally off the bottom retraces prior gains. Along with the 20-Day MA, watch the 50% retracement zone at 2.09. If the 50% level fails to hold as support, then the next lower target zone looks to be around the confluence of the 61.8% Fibonacci retracement at 2.04 and prior daily support and resistance levels

Given the weekly pattern, a drop below this week’s low will signal a bearish reversal on the weekly time frame. However, since it is occurring falling a strong bottom and a bullish breakout from a falling wedge pattern (orange lines), the pullback is anticipated to eventually resolve itself to the upside with a continuation of the bull trend. This is likely only the beginning of a bullish reversal of the trend. This week’s pullback is the first downswing since the bottom at 1.88 (A) in early August.

Normal Pull Following Initial Rally

Once the pullback completes natural gas should begin to reach higher price levels beginning with the 200-Day MA, currently at 2.335. Since the next upswing would be the first test of resistance around the 200-Day line since it failed to hold as support in early-July, there is a good chance price would be rejected to the downside at first. Moreover, as a pullback progresses the 200-Day line may fall further and potentially converge around this week’s high and provide a more significant pivot.

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