Natural Gas Forecast: Testing Key Support Levels Amid Bearish Retracement

Natural Gas Forecast Video for 03.08.23 by Bruce Powers

A continuation of the bearish retracement continued today with natural gas falling below the most recent swing low of 2.48. It looks like there is a very good chance of testing support around the uptrend line, which has converged with the 61.8% Fibonacci retracement at 2.42. If a bullish reversal evolves off those lows, then the rising parallel will be further confirmed.

Rising Parallel Trend Channel Dominates

Natural gas has been progressing in a rising parallel trend channel since the April trend low (2) where prices have moved from the bottom of the channel and up to the top, then back down again. Nevertheless, there is a chance that natural gas will fall below the 61.8% level and drops to below the lower channel line. Support would then be expected to be seen around 2.39. That is where there is a 127.2% Fibonacci extension of the most recent three-day rally, as well as the completion of a falling ABCD pattern.

If natural gas drops that far then preferably it will quickly rally back above the uptrend line. If not, the outlook for natural gas will need to be reevaluated. Certainly, at that time natural gas will potentially fall to the next lower Fibonacci level, the 78.6% retracement at 2.30. That price area is also confirmed by a 127.2% Fibonacci extension of the ABCD pattern.

Resistance at 100-Day Line Confirms Downward Pressure

The last two rallies in natural gas found resistance around the 100-Day EMA at 2.58. It could not rally above that trend indicator after four specific days that it attempted to do so. Therefore, it will be an important barrier to surpass on the way back up. It was tested three times and each time price was rejected to the downside. Therefore, it will be a significant accomplishment for natural gas to close back above it. Currently, however, the fact that price was rejected given multiple attempts to climb above the line provides strength to the downtrend.

Rally Above Today’s High a Sign of Strength

For signs of strength at this stage, a rally above today’s high of 2.58 would be needed and then further upside follow-through. The current retracement has extended in time relative to the previous two corrections. The first, off the 2.53 swing high found a bottom in only five days while the second, completed in eight days. Contrast that with the current retracement of 24 days. Nevertheless, this is the time for natural gas to build up demand for when price starts to improve.

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