Natural Gas Price Forecast: Falls to Retest Recent Support

Natural gas continued to weaken on Thursday, falling to a five-day low of 2.06 before seeing intraday support and a minor bounce. This puts it at risk of testing recent lows and possibly a continuation lower to test lower price targets.

Since a strong bullish breakout was seen on Monday natural gas has been weakening to the point where it reached a five-day low, while key support remains at last week’s low of 2.015. It has given up more than the upside seen on Monday’s breakout, a sign of weakness, and looks poised to test lower price levels.

Continuation Lower Will Target 1.92

If the 2.015 fails to hold as support natural gas could easily complete a 78.6% Fibonacci retracement at 1.92. It can be combined with the prior interim swing high at 1.94 to generate a potential support range from 2.015 to 1.92. Further down is the completion of a prior gap fill at 1.85. If that fails to turn natural gas back up the 200% extension of the falling ABCD pattern completes at 1.83. And that price level is close to the apex of the bottom symmetrical triangle pattern at 1.80.

Potential Double Bottom if Strength Returns

An alternative scenario to the continuation of the retracement is that the low today establishes a second bottom for a potential double bottom bullish setup. It is too early to tell if that is the case, but the next moves should provide some clarity. As noted above, a bearish signal is generated on a drop to a new retracement low. Today’s high of 2.16 can be used to indicate signs of strength that may lead to a double bottom upside breakout. The trigger from the double bottom would be a rally above this week’s high of 2.27.

Potential Bearish Weekly Chart on Deck

Unless there is a rally on Friday natural gas is on track to end the week with bearish shooting star candlestick pattern. This week is also an inside week as this week’s trading range is contained within last week’s range. That is a change from the prior sequence of five weeks with lower weekly highs and lower lows. Nevertheless, which price level is triggered next will provide the clue as to direction, either a continuation lower or a bullish reversal.

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