Natural Gas Price Forecast: Battles Key Support Levels Amid Bearish Momentum

Natural gas deepened its bearish pullback on Friday before finding support at $3.86 and bouncing. The day’s low was a successful test of support at the 50-Day MA, currently at $3.88. Despite a bearish continuation signal that triggered earlier in the day on a drop below support at $3.955, natural gas may begin to negate that bearish signal by closing above that price level and in the green in the upper half of the day’s trading range. Interestingly, the midpoint of Friday’s $3.86 to $4.05 trading range is also $3.955. However, a daily close below $3.955 shows continued downward pressure that could lead to a retest of support at the 50-Day MA, or a drop below it.

Stuck Between Moving Averages

Nonetheless, today’s price action leaves natural gas sandwiched between resistance around the 20-Day MA, now at $4.13, and the 50-Day MA at $3.88. An advance from current prices heads up into potential resistance around the 20-Day line and the recent interim swing high at $4.26. Natural gas remains in a clear downtrend.

Given today’s new bearish continuation signal, which confirms on a daily close below the prior low of $3.96, rallies will be heading into potential resistance levels until there starts to be solid signs of a bullish reversal. As it stands, that would start to happen on a sustained rally above the 20-Day MA and then an advance above the lower swing low at $4.26, which is the high for this week.

Weekly Bearish Signal

The significance of Friday’s bearish trend continuation increases when considering the weekly chart (not shown). That is because a bearish reversal on the weekly chart triggered today at $4.955. Therefore, it reflects added downward pressure. A daily close today below $3.955 will confirm the bearish signal on the weekly time frame. If that happens, the chance for a drop through the 50-Day line increases. And that could lead to a drop below the recent interim swing low at $3.74.

Lower Price Levels

Price areas to watch for potential support include the prior swing low, the 61.8% Fibonacci retracement level at $3.72, and a prior resistance level that may now show support at $3.64. Further down is an early target for a falling ABCD pattern. Instead of targeting 100% price symmetry between the two downswings, labeled AB and CD, this earlier level looks for an initial target in the CD leg of the decline at 78.6% of the price decline in the AB leg.

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