Natural Gas Price Outlook: Struggles and Potential Recovery

Natural Gas Forecast Video for 07.11.23 by Bruce Powers

Once again natural gas has found resistance at the top line of the rising trend channel. The high of the recent rally was at 3.64, which led to five days of consolidation and a failed attempt to move higher last Friday. A big gap down today led to a test of the 50% (3.25) retracement with today’s low of 3.25. At the time of this writing natural gas is showing a mild bounce intraday following that low. Further, today’s decline filled the gap from October 27.

Inside Week Breakdown Triggers

Today’s weakness triggered a bearish drop below last week’s low of 3.32, which was an inside week. The two-week low at 2.86 is a key level to watch during retracements as it should not be busted to the downside if natural gas is to maintain an upward bias in the near term. Other levels to watch for support and a possible bullish reversal include the 200-Day EMA and 61.8% Fibonacci retracement at 3.19 and 3.16, respectively.

3.04 Level Should be Maximum Correction

Of note is the next lower price area around 3.04. It combines the internal uptrend line with the 50-Day EMA. The fact that the 50-Day line has been tracking the uptrend line almost exactly since around October 24, the first day up off the most retracement bottom, highlights the need to give it some significance. It shows the potential for strong support around the two lines. This means that the two lines represent a lower support area that should not be busted to the downside if natural gas has a chance at recovery and a possible continuation of the rising trend channel.

Test of 200-Day EMA Support in Play

There is also significance associated with the 200 Day EMA given its long-term nature. However, prices have not yet traded much above the 200-Day line. Nevertheless, today’s decline will likely lead to another test of the 200-Day line as support. It will be a stronger indication for natural gas if a test of the 200 Day line leads to a bullish signal, rather than seeing a drop below the line first. Finally, notice that the 50-Day EMA is moving towards the 200-Day line as we go forward in time.

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