Natural Gas Price Forecast: Breaking Down Consolidation, Bearish Pressures Intact

Natural Gas Forecast Video for 06.02.24 by Bruce Powers

No go for natural gas for Monday as it remains within a tight range. It has been consolidating for six days in a relatively tight range at the lows of the current decline. Last week, support was broken at the convergence of three technical levels that are marked by the long-term downtrend line (blue), lower falling trend channel line (purple dots), and the 88.6% Fibonacci retracement. Since then, prior support around the lines was tested on at least five days as resistance, including today. Each time resistance has held with price being rejected to the downside. This reflects continued downward pressure in natural gas.

Formation of Small Expanding Triangle Continues

Over the past week the consolidation pattern has taken the form of a small expanding triangle or broadening formation. Nonetheless, a decisive drop below last week’s low of 2.02 signals a continuation of the bear trend. A decisive move is needed as the broadening formation may further expand. Given the bearish position of natural gas currently, the chance that it could fall to new trend lows is possible. A breakdown should clearly exceed last week’s 2.02 low and the bottom boundary line of the pattern. Lower targets are then at 1.98, 1.97, and 1.95. Otherwise, support may be seen at the lower line, leading to a bounce and the price of natural gas staying within the boundary lines of the triangle.

Next Downside Target is 1.98

The first downside target is the completion of a falling ABCD pattern at 1.98. Symmetry between the AB and CD legs of the decline occurs at that point. The next price levels are from the first trend low in February of last year, followed by the second trend low and lower low that was reached in April 2023. Subsequently, a drop to a new long-term trend low has natural gas first targeting the 1.80 price area. That price was previously a monthly support level.

Bullish Signal on Decisive Rally Above 2.17

Although natural gas is clearly in a bearish position, a bullish reversal may still occur. A decisive rally above last week’s high of 2.17 provides a bullish signal. Filling the gap at 2.31 is then the first order of business and likely. That price level is followed by an interim level of 2.42. Potential resistance from the moving averages begins around 2.60 and rises to 2.67.

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