Navigating Natural Gas: Bearish Trend Well Established

Natural Gas Forecast Video for 06.12.23 by Bruce Powers

Natural gas continues to consolidate below its long-term uptrend line. Earlier in Tuesday’s session natural gas rallied into resistance at the underside of the 78.6% Fibonacci retracement. Price was subsequently rejected price to the downside of the day’s high of 2.79. At the time of this writing, it is set to close with a bearish shooting star candlestick pattern.

Today’s Behavior is Bearish

Today’s behavior is generally bearish as it is typical in a downtrend for price to test previous support levels as resistance. Once that is complete the downtrend is sending a bearish signal and a continuation lower is the most likely scenario unless something occurs to change that assessment. Nevertheless, a signal for further weakening is needed. That occurs on the breakdown of today’s candle, which is at 2.675 at the time of this writing. Given that trading activity remains near the day’s low, the end of day low may be different. Once triggered to the downside, the likelihood of reaching lower potential support levels increases.

Next Lower Target is 2.62

The first target is not much lower at 2.62 (D). That is the completion of a falling ABCD pattern. Either support will be seen there, or a new bearish signal is generated on a decisive drop below the price level. In that case, the 2.55 price area is the next lower target. That price was previously swing low support and weekly support. Then, there are two swing lows that were also previously monthly support. Those levels are at 2.50 and 2.425.

Breakdown of Rising Trend Channel May Have Just Begun

Key support along the lower trend channel line was busted last week, a sign of weakness and supporting evidence for a continuation of the bearish move. Nevertheless, a rally above today’s high is showing short term strength and indicates that further testing of resistance is likely. Given recent price action, a daily close above last week’s high of 2.99 is needed to turn natural gas bullish. That provides a good size consolidation range that it needs to deal with before trending higher again.

Monthly Chart Provides Bearish Signal

As noted in previous articles, last month triggered a breakdown in the monthly chart. It was further confirmed this month as last month’s low of 2.71 has already been broken to the downside. These are bearish signals. Nonetheless, the three-month pullback pattern sometimes leads to a bullish reversal, which is why we also want to be prepared for that scenario in case it unfolds.

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