Natural Gas Faces Critical Support at 2.14: Will It Hold or Extend the Downtrend?

Natural Gas Forecast Video for 02.06.23 by Bruce Powers

Natural gas falls to its lower trendline to find support at 2.14. So far natural gas has stalled its decline but there are no signs that support will hold and reverse price. Until that happens the correction can be anticipated to continue. Today’s low was not only at support of the uptrend line but also where a falling ABCD pattern completed 78.6% of the CD leg of the decline. This is a Fibonacci ratio and a reversal can sometimes be seen off this level in an ABCD pattern.

Natural Gas Reaches Support, But Will It Hold?

If today’s low is busted the next lower price areas to watch for support include the 100% completion of a falling ABCD pattern at 2.05, followed by a prior swing low support level at 2.03. The 2.03 level is significant as it is part of the higher swing highs and higher swing lows price structure of the developing uptrend. A daily close below it could lead to further selling and a continuation of the larger downtrend as it would be a clear bearish sign. However, downside follow-through would be needed.

Greater Detail in Four-Hour Chart

A four-hour chart is enclosed today to more easily see recent price action and the 78.6% target from the falling ABCD pattern. If price reverses off today’s low, the correction may be over as the trendline combined with the 78.6% level is a logical place to find support and reverse higher. A daily close above today’s high of 2.28 is the first clear sign of strength. Aggressive traders may find an intraday setup at lower prices. For example, the breakout of a narrow range four-hour candle off today’s low. Note that at 2.28, natural gas would be above the near-term downtrend line.

Once Correction Over, Natural Gas Can Work on Uptrend

Current price levels may be the best price for natural gas prior to a rally above the recent swing high at 2.68. If today’s low holds, at some point natural gas will likely advance above that high. Natural gas is on track to close relatively weak however, in the lower half of the day’s range. Although there are no bullish signs yet, keep an eye out for indications of strength.

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