Natural Gas Price Forecast: Reaches New High, Signals Likely Pullback

Natural gas blasted higher on Thursday to reach a new trend high of 2.88 before encountering resistance. That high completed a 78.6% Fibonacci retracement and got close to testing resistance near the top trendline. A pullback followed the high and natural gas continues to trade near the lows of the day. At the time of this writing the low was 2.73 and it looks likely to end the day in the red and in the lower third of the day’s trading range. Upside is likely limited for now as today’s price action points to a period of retracement or consolidation.

Drop Below Today’s Low Points to Lower Prices

A decisive decline below today’s low points to a deeper pullback. The most recent trend high price range of 2.67 to 2.65 marks the first potential support zone. It is followed by the 50% retracement of the most recent upswing at 2.55. The lower 61.8% Fibonacci retracement at 2.48 can be watched along with this week’s low at 2.46 and a prior interim swing high at 2.44. Together, they generate a potential support zone from 2.48 to 2.44.

Remains Within Large Symmetrical Triangle

Following a retracement and bullish reversal natural gas may have a chance to test the top trendline and possibly breakout through it. Otherwise, natural gas may continue to trade range bound within a relatively large developing symmetrical triangle. The bottom line of the triangle was tightened recently following the late-August higher swing low. That swing low marks a new and higher trendline for the bottom of a triangle.

Key Support at 20-Day MA

Keep an eye on the internal uptrend line marking support of the most recent trend. The 20-Day MA has recently converged with the line. This is the markets way of telling us to pay attention to the line. Of course, the 20-Day MA also has significance as it shows the near-term trend strengthening. Also, the 50-Day MA has started confirming strength as it began to turn back up earlier this week.

Natural gas has been flirting with the 200-Day MA around a year ago. Each rally above the 200-Day line has gone only so far before the price of natural gas is pulled back to the line. The same thing may happen now. However, notice that the 200-Day line is now flat and that happens before a turn up.

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