Natural Gas Price Forecast: Retests 50-Day MA, Risks Further Decline

Natural gas tested support around the 50-Day MA for the second day in a row on Monday with a low for the day of $3.86. So far support is holding but the high on Monday of $4.01 generates a lower daily high for the third day in a row. It shows continued downward pressure along with a retest of support at the 50-Day line.

This is the second test of support of the 50-Day MA since it was reclaimed on February 13. If support fails with a decisive drop below $3.86, a continuation of an ABCD decline will be triggered. That would also increase the risk that natural gas may eventually fall below the recent interim swing low at $3.74, thereby triggering another bearish reversal signal for the near-term bull trend.

Bearish Price Behavior

Since trend support, represented by the 20-Day MA and internal trendline on the chart, failed two weeks natural gas has been consolidating below each of the lines as it tests them for resistance. A second leg down was triggered with a bear trend continuation signal on a drop below the initial swing low of $3.96 (B) on Friday.

That continuation signal is more significant than it might be given that it continues a breakdown from the recent bull trend as represented by the lines. These are early signs of a possible reversal of the near-term bull trend. Since the trendline has been broken the next lower trendline becomes a potential target. A realignment with the longer bull trend may provide the rest needed to prepare for the next advance.

Lower Price Targets

Other price levels to watch for potential support include the peak from 2023 at $3.64 and the price area around $3.52. The lower price level is an early target for the declining ABCD pattern as it represents 78.6% of the price depreciation seen in the first leg down that started from the recent trend high of $4.90. Point A to B shows the first leg down. It is interesting to note that the 100-Day MA (not shown) is near that potential target at $3.56 and it is rising. The 100-Day MA was successfully tested as support during the January decline that formed a swing low from $2.99.

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