Natural Gas Price Forecast: Falls to Crucial 200-Day Moving Average

Natural gas continued to retrace its prior advance on Monday and fell to test support around the 200-Day MA at 2.47. At the time of this writing, it had reached a low of 2.47 and it continues to trade near the lows of the day. Potential support around the 200-Day MA is enhanced by the 50-Day MA. Both moving averages have converged to identify a similar price area. Notice that the May 28 swing low of 2.475 further identifies the potential support area. Since the 200-Day line was last tested as support at the May 28 swing low, a key pivot zone has been reached today.

Rapid Drop to 200-Day Line Puts at Risk of Failing

Since selling continues to dominate during the later part of Monday’s trading session, there is no indication that support may be seen around the 200-Day line. It may fail to show support and a bearish breakdown could yet occur. If it does, natural gas next heads towards a potential support zone that begins with the 50% retracement at 2.37. Moreover, a falling ABCD pattern completes a little lower at 2.34. Given the increase in downward momentum the past couple of days, it is possible that the 200-Day MA is quickly exceeded to the downside thereby putting the 50% target zone next on the agenda.

Drop Below Moving Averages Points to Lower Targets

In addition, a decisive breakdown below both the 50-Day and 200-Day MAs would be bearish in the near term and could be followed by further aggressive selling. Therefore, a deeper retracement to the 61.8% Fibonacci retracement zone would be possible. The 61.8% Fibonacci retracement is at 2.18. It is joined by a couple of other price levels that stand out and are in the general vicinity. Support was seen at the December 2023 swing low of 2.235 and an extended ABCD pattern target is at 2.20.

The ABCD pattern target takes the AB leg of the decline and extends it by the 127.2% Fibonacci ratio to arrive at a possible target for the CD down leg. Regular readers of this column will recognize the ABCD pattern as doing a good job historically of identifying key price levels. Therefore, it may do so again and deserves to be watched.

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