Natural Gas Price Forecast: Bears Remain in Control as Retracement Continues

Natural gas triggered a bearish trend continuation signal on Monday on a drop below the recent interim swing low of 1.64 (B). A low of 1.59 was hit before support kicked in, leading to an intraday bounce. The decline took the price of natural gas to a five-week low, but just barely. Five weeks ago, support was seen that the week’s low of 1.594.

Downward momentum is increasing, which can be seen by looking at the relationship of recent daily highs to the 20-Day MA. Look at how today’s high did not get as close to the 20-Day line as the prior two days. In other words, natural gas is weakening, and that change can be seen relative to the 20-Day line.

Next Support Looks Like 1.58

The next lower potential support level is around the minor swing low of 1.58 from February 23. A more significant target is 1.55. That lower level comes from a declining ABCD pattern where the CD leg of the pattern uses is 61.8% (Fibonacci ratio) of the AB leg. The next lower target based on the ABCD pattern is taking 78.6% ratio of the AB leg when drawing the CD leg of the pattern. It comes in at 1.49. If reached, natural gas would have first triggered a bearish continuation of the long-term downtrend as the most recent trend low was 1.52 from February.

Potential for Double Bottom

Regardless of the bearish outlook the possibility exists for a second bottom with the current retracement. That could set up a potential double bottom pattern. It will depend on what happens next. If a sustainable bullish reversal is seen prior to breaking below the 1.52 trend low, then a potential double bottom pattern would be forming.

New Trend Low Target of 1.49

A second scenario might occur from the 1.49 target. If reached, natural gas would have dropped below the 1.52 trend low and triggered a bearish trend continuation. However, the 1.49 target as potential support is given added significance since that price is also the 127.2% Fibonacci extension of the full upswing from the prior trend low from April 2023. When two approaches identify the same or similar price level, it should be given added attention.

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