Natural Gas Price Forecast: Breakdown Signals Possibility of Deeper Decline Ahead

Natural gas triggered a continuation of the short-term bear trend on Wednesday as it fell below the prior trend low of $3.28 and a rising trendline. A breakdown from an inside day established on Tuesday led to a decisive decline and a low of $3.15 for the day. However, sellers remain in charge at the time of this writing as trading continues near the lows of the day. A daily close below the rising trendline, which looks likely, will confirm the breakdown from the line. That will put natural gas on track to test potential support around the 78.6% Fibonacci retracement level at $3.13 and the higher swing low at $3.10 from May.

Bearish Momentum Puts $3.10 Swing Low at Risk

Today’s low was close to hitting the 78.6% level and it may have been close enough to consider it reached. However, given the drop below the trend line and deeper decline below the 200-Day MA, now at $3.42, the $3.10 swing low is at risk of being broken. That would trigger another bearish reversal signal. As noted previously, there is a lower target for natural gas, around $2.97 to $2.95.

That zone consists of an initial target for a falling ABCD pattern (purple) and an AVWAP level measured from the 2024 trend low, respectively. Notice that natural gas reversed from support around the AVWAP line twice previously, once in April and in October 2024.

Lower Trendline is Potential Target

Despite the potential for the $2.97 price area being reached, there is also a long-term uptrend line (purple) that touches an August 2024 swing low at $1.88. Since it is a long-term line it should show signs of support, if approached. The uptrend line is currently a little below the $2.95 AVWAP line but will match that level by the end of July. Keep in mind that trendline signals should be confirmed by other technical signals as there can be more than one placement for the line.

Measured Moves Point Lower

An assessment of previous bearish corrections since the January swing high shows a 31.6% decline from the January swing high and a 32.8% decline from the March 31 lower swing high. Note that the March downswing was the second leg down from the $4.90 trend high. So, the full bearish correction was larger with a 41.7% decline in a relatively short period. A 32.8% drop for the current downswing will complete around $2.79.

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