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Natural Gas Price Forecast: Likely Test of Resistance Before Return to Key Support Levels

By:
Bruce Powers
Published: May 28, 2024, 20:24 GMT+00:00

Natural gas is expected to retrace and consolidate after a 92% advance, with key support at the 200-Day MA around 2.46.

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Key support for natural gas remains around the 200-Day MA at 2.46. It has been bouncing from that price area following a pullback low of 2.475. Given the sharp 92% advance that culminated with last week’s high of 2.92, natural gas is due for a period of retracement and consolidation. It looks like it has started.

If correct, the advance off the area around 200-Day MA will eventually be met with resistance that turns the price of natural gas back down to retest support around the 200-Day line, and possibly fall below it. Certainly, given recent volatility a drop through the 200-Day MA, even if it is brief, would not be a surprise.

A graph of stock market Description automatically generated with medium confidence

Bounce Into Resistance

Areas to watch for resistance during a bounce includes a price zone from 2.61 to 2.63. That zone encompasses support seen on two different days out of the previous three. Friday’s low provides the 2.63 price level. If natural gas can close above Friday’s 2.71 high, it may have a chance to test recent highs. Otherwise, the expectation is for resistance to be seen on the bounce, followed by a deeper pullback or at least a retest of the 200-Day line.

Potential Bearish Weekly Candle Remains

As noted yesterday, last week natural gas completed a bearish shooting star candlestick pattern and ended near the lows of the week’s trading range. It is matched by the 50-Week MA, currently at 2.50. Therefore, the 200-Day line on the daily chart also represents the 50-Week MA. Since they are together, this week’s low of 2.475 takes on greater significance as the breakdown below it indicates a failure of two long-term moving averages to hold as support. A daily close below 2.475 will confirm the breakdown and increase the chance for an eventual test of lower price levels.

Lower Price Levels

The first lower price area to watch is around the 20-Day MA at 2.73. That moving average is a key trend indicator for the current sharp trend. It has not yet been tested as support since a gap above it on April 26. Therefore, it is due to happen. Keep in mind that the line is rising, and the price represented by the line when approached may change. Below the 200-Day line is a prior interim swing low 2.31. But the 50% retracement at 2.25, along with a more significant swing low of 2.235 from December 2023, have identified a similar price zone.

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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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