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Natural Gas Price Forecast: Down, Consolidate, or Reverse?

By:
Bruce Powers
Updated: Feb 23, 2024, 21:57 UTC

Natural gas is at a critical juncture, with potential for further downside or a reversal higher on the table. Recent price action suggests bearish momentum, but a recovery is still possible with improving demand.

In this article:

Natural gas is at a critical position to either continue to trend down, consolidate around the bottom, or reverse higher. Wednesday’s advance and daily close above the 8-Day MA for the first time in 17 days gave hope to the bulls. But that minor sign of strength faded fast on Friday as it dropped sharply below the 8-Day line. Natural gas is on track to close Friday in such a position. In addition, it is on track to close weak for the day, in the lower quarter of the day’s price range, and weak on the weekly chart as well. It is currently trading in the lower quarter of this week’s range.

A graph of stock market Description automatically generated with medium confidence

Next Support at 78.6% Fibonacci Retracement

Support was seen today at 1.59, but trading continues near the lows of the day at the time of this writing. Nevertheless, today’s close will likely be bearish. The retracement today has fallen below the 61.8% Fibonacci retracement, and it looks to be intent on testing the 78.6% retracement at 1.58, if not lower. The two key near-term price levels are the recent trend low of 1.52 on the downside and this week’s high at 1.79. Not much new will be known until natural gas gets out of that range.

Advance Above This Week’s High of 1.79 Needed for the Bulls

There is still a chance for an upside recovery if support is seen around the 78.6% retracement level and it is followed by improving demand. A decisive rally above this week’s high will have natural gas next targeting the 20-Day MA at 1.90, followed by the previous trend low from last April at 1.95. That price level begins a price range that goes up to the 38.2% Fibonacci retracement at 2.04, the top of the range, where resistance may be seen. A decisive breakout above 2.04 would be a sign of strength.

Gap Not Yet Filled

There is a large gap from January 29 that has not been filled. A daily close above 2.04 increases that possibility that it may be, or partially filled. First though, there needs to be a rally above the 1.17 minor swing high. Nevertheless, it is important to keep in mind that natural gas remains in a downtrend in all major time frames. The monthly, weekly, and daily charts are all in solid downtrends. Rallies may be choppy and short-term volatility is likely to remain high.

About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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