Natural Gas Price Forecast: Bearish Momentum Builds Amid Heavier Selling

Natural gas fell further on Wednesday to a six-day low of $3.48. That was the lowest price for the day at the time of this writing and close to hitting the 38.2% Fibonacci retracement level, only one-cent lower at $3.47. The anchored volume weighted average price (AVWAP) line (light blue) also marked potential support around $3.49. Trading continues to be heavy as sellers remain in control in the lower quarter of the day’s $3.48 to $3.64 trading range.

It looks likely that the day will end with the price of natural gas in a similar bearish position. If so, the next potential support level is at the recent minor pullback low of $3.42. That low is also a weekly low from last week. But that will be at risk of failing as the chance of eventually testing the 20-Day MA (purple) as support, now at $3.38, improves.

Lower Low and Lower Daily High

A lower daily low and lower high will be established today for the second day in a row. That will be the first time that a pullback from a high lasted more than one day since the $2.86 low in late April established a new swing low. It could mean that a deeper correction may follow. Nonetheless, as noted above, the 20-Day line is the next key potential support level, as there has not been a test of the line as support since it was reclaimed on May 1. Notice that the two days prior to the breakout, resistance was tested around the 20-Day MA at the highs of the day.

First Pullback to 20-Day MA Support

The first pullback following a bull breakout should resolve itself to the upside if it is only a pullback. A failure of the 20-Day line as support was seen two days after the early March peak. That is enough time to where the recent reclaim of the line could have some significance. But not too much significance. Looking back at the trend for the past year shows the 20-Day MA giving a choppy indication of trend support or resistance. Sometimes it did a better job than at other times.

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