Natural Gas Price Forecast: Navigating Consolidation Amid Uncertain Markets

Natural Gas Forecast Video for 02.02.24 by Bruce Powers

Further consolidation in the price of natural gas occurred on Thursday as the process of price discovery continues. A small broadening formation has formed as today with the outside day, and trading occurred outside the range of the past four days. It is a consolidation pattern where the trading range expands as the pattern develops. It reflects uncertainty at a critical support area. The broadening formation is defined by two trendlines heading away from each other. One across the recent lows and the other touching the highs.

Price Range Expands into Broadening Formation

As the broadening formation progresses false breakouts, up or down, may trigger causing traders to react, but then there is little to no follow-through as the consolidation range expands. Eventually, a breakout does lead to a continuation. Nonetheless, today’s high of 2.17 is near term resistance and the top of the consolidation range. Support is at today’s low around 2.03. That price level was support in the past and it is a daily swing low and monthly low.

Prior Support Repeatedly Sees Resistance

Resistance was seen again today around the downtrend line and lower declining parallel channel line (dotted purple). Each day this week natural gas closed below the lines, and it will likely do so again today. In a downtrend, once support is broken a market will typically swing back to test prior support levels as resistance. We are seeing that this week. Typically, such price behavior leads to a continuation of the dominant trend. A bearish monthly signal hit today as January’s low at 2.04 was slightly exceeded to the downside. It further confirms the bearish trend on the long-term chart.

Bearish Continuation Will First Target 1.98, then 1.97

Since the decline has fallen below the 88.6% Fibonacci retracement and there are little signs of strength, the chance for an eventual test of trend lows from 1.97 to around 1.95 is high. There is also a slightly higher target from the declining ABCD pattern at 1.98. If natural gas falls decisively below 1.95 and keeps falling the next area to watch for support looks to be around 1.795. That price level was monthly support in September 2020.

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