Natural Gas Price Forecast: Weakens as Key Support Levels Come into Focus

Further consolidation in natural gas occurred on Thursday but with a downward bias. On Wednesday natural gas rallied to find resistance at a rising trendline that was a support line until last week when a break below the line occurred. However, on Thursday a lower daily high was established and a lower daily low. Natural gas fell below yesterday’s low to reach a low of $3.98 for the day, at the time of this writing. Also, trading continues near the lows of the day and natural gas is heading towards recent support that ends with a low of $3.96. That is the low for the past 13 trading days and a weekly low from last week.

Testing $3.96 Support

If the $3.96 support area is busted to the downside natural gas heads towards a test of support around the 50-Day MA, currently at $3.88. That said, since the 50-Day MA is rising it could converge around recent lows before it is approached. In other words, there will be little downside momentum likely below $3.96 before the 50-Day line is encountered. If the 50-Day line fails to hold as support, it looks like the recent swing low around $3.74 will be challenged as support. That price level is joined by the 61.8% Fibonacci retracement of the most recent upswing at $3.72. There is also previous resistance from the 2023 peak at $3.64, which may show signs of support when approached from above.

Bearish Signs

Given the decline today below Wednesday’s low, a lower swing high may have been established. It completes the CD leg of a developing declining ABCD pattern (purple). It shows a 78.6% target for the CD leg at of the decline at $3.52. Further down is the 100% target for the pattern at $3.31. That is where there is price symmetry as the decline in both the AB and CD legs of the decline match. Notice that in either case the next lower trendline may be broken before the targets are hit. Unless a drop to the 78.6% level happens in the next few days it looks like the trendline will be tested as support first.

Weekly Bearish Pattern

Last week ended with a bearish candlestick pattern and a relatively weak close in the lower third of the week’s trading range. Therefore, a weekly bearish reversal will be indicated with a drop below last week’s low of $3.96. That would increase the chance that the bearish correction may challenge the $3.74 swing low as it is also a weekly low, or fall lower.

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