Natural Gas Price Forecast: Bear Trend Remains Dominant After Break

Trendline Break Confirms Bearish Bias

Natural gas took a rest on Tuesday following a break below an uptrend line and prior low of $2.90. A narrow-range day developed in the lower third of Monday’s range and below the uptrend line, confirming the trendline break that occurred on Monday with a daily close below it, and a similar pattern looks likely for Tuesday.

Tuesday’s high of $2.94 was a successful test of resistance near the prior support line, while the low for the day at $2.87, was near Monday’s low. This bearish behavior suggests that a downside continuation is more likely than an upside move. Once prior support converts to resistance, the bear trend may be ready to proceed.

Resistance Levels Cap Short-Term Strength

Downward pressure in natural gas remains if it stays below Monday’s high of $3.13, which also coincides with the 50-day moving average. However, a lower swing high at $3.23 from last Thursday holds greater significance as an interim lower swing high. If natural gas can sustain a move above it, there is a chance for further strengthening. The 200-day moving average at $3.54 remains key upside dynamic resistance.

 Support Levels Define Risk

Key support is near the February swing low of $2.81. A decisive decline below that level would trigger a continuation of the bear trend that began from the low swing high at $4.08 in late January. Such a move would also increase the risk that the January trend low at $2.58 could be broken, which would extend the larger bear trend that began from the December peak of $5.02.

Retracements Confirm Bear Trend

The most recent decline below the lower long-term uptrend line on February 2, was quickly followed by a retracement to test it as resistance, resulting in the higher swing low at $2.81. Subsequently, another larger and more significant retracement rallied to test the trendline as resistance. Again, resistance held, leading to the current downswing. This sequence reinforces that once prior support confirms as resistance, the bear trend remains dominant, suggesting that a continuation of the bearish trend is on deck.

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