Natural Gas Price Forecast: Falls Further After Breaking Key Support Levels

Natural gas triggered a bearish reversal of the uptrend on Thursday, as the prior higher swing low from January at $2.99 was broken to the downside. At the time of this writing, a new trend low of $2.86 was achieved, and trading continues in the lower half of the day’s trading range.

The new bearish trend reversal signal followed a breakdown below the 200-Day MA on Monday, which was confirmed by daily closing prices below the 200-Day line. A daily close below the prior trend low of $2.99 will confirm today’s bearish reversal signal, putting natural gas in a position to test the next lower potential support zone, starting around $2.79.

41.7% Decline Reached

Today’s low completed a $2.04 or 41.7% decline in the price of natural gas in 32 days, when measured from the recent trend high of $4.90 (A). Since the February 2024 low, the biggest bearish correction was 40.7%, starting after the $3.16 swing high in June. Therefore, on a percentage basis there is price symmetry between the two downswings, which can sometimes lead to a completion of the correction.

But since new bearish signs were seen this week, with a drop below a prior swing low and the 200-Day MA, the potential to eventually decline to test support around the lower uptrend line (purple), increases. That trendline is part of a large rising parallel trend channel that reflects a degree of symmetry within the price structure of the long-term uptrend.

Project to Lower Channel Line

Nevertheless, further bearish indications follow a rejection of natural gas from the top of the channel. It indicates that sellers remain in charge, with renewed enthusiasm. Once one side of the pattern is tested and leads to a reversal, the other side of the pattern becomes a potential target. Whether the lower line is reached or not, the next lower price target becomes more likely to be hit. Moreover, in addition to the purple uptrend line that represents potential support, a top line for a previous large symmetrical triangle pattern is also nearby.

AVWAP Level at Thursday’s Low

Despite the continued bearish indications, today’s low tested support at the anchored volume weighted average price (AVWAP) (light blue) level measured from the February 2024 low. That highlights today’s low as a potentially significant support level. It is worth keeping an eye on as the higher swing low from October was a successful test of support around the same AVWAP line. Keep in mind that since there was a slight undercut of the line, it was followed by a quick recovery. A similar scenario could unfold with the current correction.

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