Natural Gas Price Forecast: Consolidation Continues, Watch for Breakout

Natural gas remained in consolidation on Tuesday, as it once again tested resistance around the 20-Day MA (purple). It continues to trade within a five-day range with a high of 1.77 and a low of 1.64. Natural gas briefly advanced above the 20-Day line in late-February after being below it since mid-January. However, the current retracement took it back below the line last week, where it has remained.

Although there has been no continued selloff since then as consolidation has ruled, several successful tests of resistance at the 20-Day MA occurred recently and it reflects bearish price behavior. That would change with a decisive rally above 1.77. But until then, the chance for a bearish continuation remains.

Downtrend on Multiple Time Frames

As can be seen on the chart, natural gas is in a downtrend on multiple time frames. Highlighting the decline starting from the October 27 swing high of 3.64, a series of lower swing lows and highs can be seen on the chart with the most recent lower swing low occurring at the February 20 trend low. There was a brief high swing low generated on January 22, but that attempt to rally quickly faded and led to the most recent lower swing low. Last week’s low was a second attempt at a higher swing low, if it can be maintained.

Bulls Watch for 1.77 Breakout

A decisive breakout above the consolidation high at 1.77 prior to a drop below 1.64 will increase the chances for a higher swing low. This is important as the swing low forms the structure of the trend. One of the first signs that the trend might be attempting to turn up after being down for a while is the occurrence of a higher swing low.

A daily close above 1.77 would confirm that upside breakout and the higher swing low. Natural gas would then be heading towards the bottom zone of the declining blue dashed parallel trend channel. Resistance was seen in that area during the recent rally to the 2.01 peak (B). Next up is the 50-Day MA at 2.10. A simple rising ABCD pattern would complete close to that price level at 2.13.

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