Natural Gas Price Forecast: Breakdown Keeps Pressure on Prices

Price Stalls After Breakdown Below Key Support

Natural gas remained stalled near the trend low of $3.13 on Monday, as it traded higher for the day and inside Friday’s range. Monday’s high was $3.43 and the low $3.18. This shows minor support near the 78.6% Fibonacci retracement area at $3.24. Friday’s close at $3.14 confirmed a breakdown from that potential support area. Although minor strength was seen on Monday, natural gas remains below the 200-day moving average, which broke last week as support, and testing support near the uptrend line at the bottom of a rising channel. A breakdown of the channel confirmed with Friday’s close below the line.

Reclaim Levels Needed to Ease Downside Pressure

Before there were signs of strength from the current low that could signal further upside, the lower swing high at $3.63 would need to be reclaimed, along with the 200-day average, now at $3.55. Until then, natural gas is showing continued downward pressure that could take it to lower price levels. Potential support around a long-term uptrend is next. If it was hit today, it would be around $3.03.

Fibonacci and ABCD Targets Define Lower Support Zone

A little below the trendline is a relatively large price range starting from the 88.6% retracement level at $2.95. That retracement level is followed by a 100% projected target for a falling ABCD pattern at $2.89. It shows when the decline in the second leg down (CD) off the December peak (AB), matches the drop in the first downswing (AB), and therefore it identifies a possible pivot level.

Monthly Structure Supports Potential Long-Term Support

On the monthly chart, natural gas has two higher monthly lows that occurred near the lower price zone. October’s low was at $2.89 and the higher low in September was at $2.77. So far, during the bearish correction. Potentially, this supports the likelihood of support being seen near the 88.6% level or a little lower. It is interesting to note that the previous bearish measured move from the March peak ended once price was down by 46.6%. A similar percentage decline for the current decline will end near the ABCD target. In summary, there are at least five-indicators pointing to likely support near the 88.6% price zone, in case it is approached.

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