Natural Gas Price Forecast: Drops Below 50-Day Line

The price of natural gas turned red on Monday following an initial advance to a new trend high of $3.84. Selling pressure intensified at that point and led to a decline below Friday’s low, to a low for Monday of $3.61. Downward pressure remains at the time of this writing as trading continues in the lower third of the day’s trading range. A bearish outside day is therefore established with a likely daily close for Monday’s session below the 50-Day MA. That would follow a short-term bullish sign indicated by the daily close above the 50-Day line on Friday. Today’s high was a touch of a prior small interim swing high at $3.83, as resistance was seen again.

Clearer Signs of Resistance

Natural gas has been attempting to break out above a resistance zone with a high at the 50-Day MA, which is now at $3.75. A breakout was successful on Friday but given the short-term bearish implications seen today, a failure of that initial breakout may be in the works. Monday’s session looks like it will end with natural gas below the low of the resistance range, which is at the 61.8% Fibonacci retracement at $3.72. That would confirm a failure of the 50-Day MA bullish breakout. Note that the daily close from Friday confirmed the bullish breakout above the 50-Day line.

Further Weakness Looks Likely

Further weakness will be indicated by a drop below today’s low of $3.61. That could lead to a decline to test initial support areas. The next price zone looks to be around the confluence of two similar price levels. There is an AVWAP level from the recent swing low at $3.48 and a minimum Fibonacci retracement of 38.2% at $3.47. Nonetheless, there is another zone of confluence lower down at $3.35. That is where the 50% retracement and 20-Day MA currently reside.

Resistance Around Neckline

However, there are a couple things to be aware of. If the lower price zone is reached, then the most recent minor swing low at $3.42 will have been breached and therefore the price structure of the initial advance from the recent bottom will alter. That would also show the completion of a rising ABCD pattern and could lead to another test of lower support levels. Notice that the current advance is only the first following a breakdown from head and should top pattern.

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