Natural Gas Price Forecast: Breaks Key Support, Sellers in Control

Natural gas fell through the prior trend low of $2.97 and a key long-term support zone on Monday. It reached a low of $2.09, at the time of this writing, and continues to trade near the lows of the day. A long-term uptrend line was busted along with an anchored volume weighted average price (AVWAP) line calculated from the 2024 trend low. If sellers remain in charge, it looks like the prior swing low of $2.86 from April may be tested as support or lower prices. Nonetheless, today’s breakdown will be confirmed on a daily close below the AVWAP level, currently at $2.97.

Monthly Bear Trigger

Furthermore, a bearish monthly breakdown (not shown) triggered today as last month’s low of $2.97 was breached. That put natural gas at four-month low and falling. Prior monthly support was seen at the $2.86 low in April, and it looks likely to be challenged if downward pressure remains. That is a five-month low. The trajectory of the current decline also looks like it may be heading to a test of support around the 20-Month MA, now at $2.85. Since the two price levels are so close together, that price zone deserves particular attention, if it is approached.

Symmetry Points to $2.63

In addition, there is an initial target for a falling ABCD pattern (purple) at $2.63. That is where there will be symmetry in price compared to the first leg down (AB). Once that occurs a key potential pivot is identified. Finally, there is a second 78.6% retracement level, a little lower at $2.53. It measures a larger upswing than the prior 78.6% level.

Fast Recovery Could Change Bearish Outlook

An alternative to the above bearish scenario would be a relatively quick recovery of the AVWAP line and a daily close above it. That should then be followed by a recovery of the long-term uptrend line and a close above it, as well as above the prior trend low at $2.97. A bearish closing price today, in the lower third of the day’s range, keeps the sellers in charge and the lower price targets in sight.

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