Natural Gas Forecast: Potential for Lower Prices Before Rebound

Natural Gas Forecast Video for 06.07.23 by Bruce Powers

It is looking more and more like natural gas wants to go lower before going higher, although there is no confirmation signal just yet. Another outside day occurred on Wednesday, with natural gas set to close weak, near the lower part of the day’s range. Resistance was tested again today with a high of 2.79. That high is in the lower part of the identified red highlighted resistance zone.

Last Week’s High and Low (2.88 and 2.62) Serve as Support and Resistance Levels

This week natural gas has been trading inside the prior week’s range. Since this week’s candle is still forming the high and low of the range will not be as reliable as price levels until the week completes. Therefore, last week’s high (2.88) and low (2.62) can be watched for the next near-term support and resistance levels to pay attention to. Nevertheless, last Friday’s 2.83 high also stands out as a pivot level to watch. It can provide an earlier sign of strength than waiting for natural gas to exceed last week’s high.

A Decline Below 2.62 Increases the Chance of a Deeper Pullback

A decline below last week’s low of 2.62 is bearish and increases the chance for a deeper pullback. In the larger picture, it would be healthier for the developing uptrend to spend more time retracing or consolidating prior to continuing its advance. It just completed a 34.7% rally in 18 days. That is a strong rally and more aggressive than what was seen in the two previous advances. The May 19 swing high completed a 32.2% rally, while the April 28 trend high ended a 30.0% advance. The relative performance of each of those rallies indicates that underlying strength in natural gas is improving.

Target for Further Decline: 50% Retracement Zone at 2.51

If natural gas falls below last week’s low, it next targets the 50% retracement zone at 2.51. That price area is confirmed by the 34-Day EMA, which has converged with the retracement level. And if the pullback continues from there watch the 61.8% Fibonacci retracement zone at 2.42 for signs of support followed by signals for a bullish reversal. Worse case, natural gas should not fall below the uptrend line along the lows of the rising trend channel.

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