Natural Gas Price Forecast: Holds Important Support at 2.70

Bruce Powers
Updated: Jun 23, 2024, 04:28 GMT+00:00

Natural gas reached a new low of 2.67, testing critical support levels, with potential for sharp drop if the 2.70 level breaks.

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Natural gas triggered a deeper pullback on Friday to reach a new low of 2.67 before signs of support showed up. At the time of this writing, it is set to end the day with a relatively narrow trading range, and either at or above a support level marked at the center horizontal of a pennant consolidation pattern at 2.70.

A decisive daily close below the 2.70 level reflects a failure of the bull pennant breakout. Failed patterns are often followed by sharp moves in the opposite direction of the initial breakout.

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Bearish Weekly Signal Dominates

Last week natural gas reached a new trend high of 3.16 before sellers took back control and drove the price back down. Subsequently, a bearish weekly signal triggered earlier this week that is certainly following through to the downside as trading continues near the lows of the week. If 2.70 support breaks, the 200-Day MA at 2.47 may be tested quickly.

It can be considered along with the most recent swing low of 2.475. A 38.2% Fibonacci retracement completes at 2.55. Given the bearish weekly pattern a lower price zone around 2.37 could also be approached. That would follow a bearish drop through the 200-Day MA, however. It comes from the convergence of the 50-Day MA and the 50% retracement level of the full rally off the April swing low.

Upside Breakout Above 2.77 Could Lead Higher

Nonetheless, it remains possible that a bullish reversal signal is given on Monday on a move above today’s high of 2.77. That price level coincides with the 20-Day MA at 2.78. The 20-Day line would also need to be taken out for a more reliable indication of strength. The 20-Day line was tested as resistance earlier in today’s session and the price of natural gas was rejected to the downside.

This behavior indicates that the market recognizes the price area of the 20-Day MA. Notice that on Monday and Tuesday it was clearly showing an area of support. Today’s successful test of the line as resistance sets of a continuation of the retracement to lower price zones. But, at stated above, that may start to change on a breakout above 2.77.

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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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