Natural Gas Price Forecast: Key Support Zone Under Threat

Intraday Bounce at Key Confluence Zone

Natural gas fell to a 12-day low of $2.98 during Monday’s shortened holiday session, before finding support at the confluence of the 50% retracement of the prior advance, the 50-day moving average and bouncing intraday. Resistance was tested near the 20-day moving average and a short uptrend line, as well as the 100-day moving average. Each indicator had previously acted as support but ultimately failed during a breakdown below those levels on Friday, which was confirmed by a daily close below beneath them.

 Reversal Risk Following Failed Support Structure

Although a successful test of support near the 50-day moving average, could suggest that support may hold, it is also possible that it fails and a deeper decline unfolds. During the recent advance a high was reached at $3.31, completing a 78.6% Fibonacci retracement of the prior decline. That move may have effectively completed the pullback towards long-term trend resistance represented by the 200-day moving average and a long-term uptrend line.

Breakdown Signals Weakening Trend Structure

Last week’s breakdown triggered the failure of a small bull pennant formation and a rising trend channel. Support near breakdown zone was confirmed by several indicators, including the 38.2% Fibonacci retracement, a small uptrend line, the 100-day moving average, and the 20-day moving average. This confluence increases the significance of the breakdown and the subsequent loss of that support zone.

Downside Continuation Toward Fibonacci Targets

Therefore, downward pressure now dominates and suggests that a drop below Monday’s low of $2.98 could signal a continuation of weakness and a potential failure of support near the 50-day average. That would likely lead to the 61.8% Fibonacci retracement at $2.90, which is also a minor swing low. Alternatively, the lower 78.6% Fibonacci retracement zone near $2.79 could come into play if selling pressure accelerates. That level currently aligns with an uptrend line connecting to the January lows.

Resistance Levels Define Near-Term Recovery Path

Near-term resistance of note is Monday’s high of $3.10, since it is a lower daily high. A rise above it would begin to shift short-term momentum and could trigger a recovery of the recently broken trend indicators. After that, the interim swing high at $3.18 marks the next key resistance zone.

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