New Low in Natural Gas as It Continues to Weaken

Natural Gas Forecast Video for 21.02.23 by Bruce Powers

Natural gas triggers another trend continuation signal on Monday to reach a low around 2.18, before a minor intraday bounce occurs. This follows the breakdown from an 11-day consolidation range late last week. Potential monthly support around 2.24 was exceeded last Friday and then again today. All signs so far are indicating natural gas is pointing lower.

Possibly Support Levels

There is possibly monthly support zone around 2.16. But after that it doesn’t look like much support until down around 2.03 to 1.99. That’s where there was monthly support seen a few times in the past. After that there is the September 2020 monthly low of 1.79, followed by the 127.2% Fibonacci expansion of the final leg up in the last uptrend.

Third Largest Correction in 23 Years

Natural gas is now entering its 26^th week of a price correction that started off the August 2022 high of 10.03. It has fallen as much as 78.3% as of today’s low. That’s the third largest correction in natural gas in 23 years. This means there has only been two other instances where natural gas corrected more than 60% over the time frame.

There have been eight corrections since 2019. Each has exceeded a decline of 60%, with the maximum drop being 82.4% in 2008. The second worse decline was 81.5% in 2000. The average decline has been 74.12%.

It is hard to say what this all might be indicating other than history shows that natural gas can fall further in a somewhat regular correction. At this point an 80% drop would put it around 2.00, and an 82% decline around 1.80.

Signs of Strength

Nevertheless, natural gas remains overdue for a counter trend rally of some degree. When it comes it could come fast. Of course, this possibility is helping to keep at least some buyers come in as the price falls further.

Price levels to watch for the first signs of strength include today’s high of 2.30, followed by Friday’s high of 2.42. A daily high above Friday puts natural gas back inside the 11-day consolidation zone. However, until price busts through the top of the range at 2.66, it is going to be hard to retain confidence that it is going higher.

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