Chart Analysis: Sellers Remain in Control as Natural Gas Hits New Retracement Low

Bruce Powers
Published: Jan 31, 2024, 21:22 UTC

Amidst market volatility, natural gas grapples with support as downside pressures persist. January's bearish close suggests a challenging road ahead for this energy commodity.

Natural gas tank, FX Empire

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Natural Gas Forecast Video for 01.02.24 by Bruce Powers

Natural gas put in an outside day today as it further consolidates around recent lows A new trend low was hit briefly today at 2.04 before an intraday rally kicked in. However, today’s close may be the highest daily close in the past few days, which would be a minor sign of short-term strength. The downtrend line was tested as resistance with the day’s high of 2.16. Currently, natural gas is trading above the closes of the past two days. Tuesday closed at 2.09 and Monday the close was at 2.06.

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Next Lower Target at 1.98

Today’s low completed a 44.01% correction from the October high (A) and a 40% decline from the secondary swing high (C) hit earlier this month. The decline in price seen in the two downswings will match around 1.98. That’s where the declining ABCD pattern completes an initial target. Price action this week is reflecting continued downward pressure on prices. Sellers remain in charge and the chance for a continuation lower is high. Whether it happens soon or following a counter-trend rally remains to be seen.

As noted, the initial ABCD target is not far below today’s low and if the low is exceeded to the downside that target is likely to be hit. The 1.98 target also marks the beginning of a potential support zone down to 1.95 level, which is the lowest price seen so far in the decline from the August 2022 peak.

Rally Above 2.17 Needed for Signs of Short-term Strength

On the upside, a decisive rally above this week’s high of 2.17 puts natural gas into Monday’s gap. The first area of possible resistance looks to be around last week’s low of 2.31. If it can close above there it may have a chance of moving higher. That is followed by the 50-Day MA at 2.635.

Bearish Monthly Close for January

Finally, Wednesday completes the month of January and natural gas will end the month in a bearish position, near the lows of the month’s range. It is also the third month in a row with lower monthly lows. Certainly, this is bullish price behavior. However, if the price of natural gas is going to decline further eventually, it wouldn’t be surprising to see downward momentum stall and a period of consolidation first.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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