Natural Gas Price Forecast: Falls to Support but Will it Hold?

Natural gas took the alternate route on Thursday and continued to pullback from the 2.30 high. The 20-Day MA failed to hold as support and it fell to a low of 2.03 before there were signs of support. That low hit the next lower support zone identified over the past couple of weeks that combines the 61.8% Fibonacci retracement with a previous daily support and resistance price zone hit on multiple days previously (blue horizontal). Further testing of support around today’s low may remain on the horizon as a falling ABCD pattern extended by the 127.2% ratio completes a little lower at 2.02.

Bearish Reversal on Weekly Chart Playing Out

There was a bearish reversal triggered on the weekly chart earlier this week and it looks like that is now playing out. Moreover, natural gas remains below both its 50-Day MA and 200-Day MAs, in addition to falling back below its 20-Day MA today. If the 2.02 price area fails to hold as support, then a dip lower may be in the plans. It looks like the next lower price zone is from around 1.95 to 1.92. The lower level is the 78.6% Fibonacci retracement level and the 1.95 level is the target from a falling ABCD pattern extended by the 161.8% ratio.

Bigger Picture Remains Bullish

Despite short-term weakness, natural gas remains on track to progress higher once the retracement is complete. It broke up and out of a falling bull wedge two weeks ago and then rallied to a high of 2.30, which was above a prior swing high at 2.27. That rally also recaptured the 20-Day MA. The bottom at 1.88 on August 5 completed a 40.2% decline from the prior swig high at 3.16. On a percentage basis, that drop exceeded all the prior corrections starting from the February 2023 bottom starting from the February 2023 bottom, except one. The decline from the January peak to the February low was 55.1%.

The current retracement is the first pullback since the bottom reversal since the bottom earlier this month. Once support is found followed by a bullish reversal on some time frame (daily or intraday) It has the potential to lead to a resumption of the developing bull trend. Given the significance of the prior decline a reversal up also has the potential to surprise to the upside.

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