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Natural Gas Price Forecast: Retraces Gains, Tests Key Support Levels

By:
Bruce Powers
Published: Jun 17, 2024, 20:37 GMT+00:00

While a further drop could risk failure of recent bullish activity, holding support around $2.74-$2.76 could set up natural gas for a bullish continuation.

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Natural gas further retraced its prior advance on Monday as it fell below the long-term downtrend line to reach support at 2.76. That completed a successful test of support at the purple 20-Day MA. It is the first touch of the 20-Day line since natural gas rose above it on April 26.

Since the 20-Day line is showing support so far, there is a possibility that today’s low completes the retracement. The low price today also completes a successful test of support around the top of the bull pennant pattern.

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Test of 20-Day Line Might Complete Retracement

Lower prices begin to put recent bullish activity at risk of failure. Although there could still be a brief drop lower in the short term, if a quick recovery follows it will put natural gas back in a position to progress its uptrend. The 61.8% Fibonacci retracement level is at 2.74. If the 20-Day line is busted, currently at 2.76, then natural gas will likely reach the 2.74 area.

If support is seen from there, followed by a recovery above the 20-Day line, the bullish price structure will be maintained. However, a drop below the 20-Day line where natural gas then stays below the line, will be short-term bearish. A failure of the bull pennant breakout is indicated on a drop below the center line at 2.70.

Rally Above Today’s High of 2.85 Shows Strength

If a bullish setup completes today, then a decisive breakout above today’s high of 2.85 will be a sign of strength. Today’s candlestick pattern may take the form of a bull hammer candlestick pattern. A daily close in the top third of the day’s range will be a stronger indication than a close lower than the top third of the range. A decisive advance above today’s high would then be a sign of strength that should continue to higher prices.

Bearish Weekly, but Quick Bullis Recovery Will Negate Implications

Today’s decline in natural gas also triggered a bearish reversal on a weekly time frame. The weekly pattern last week was of a bearish shooting start candle. It triggered today on a drop below 2.86 and it will confirm on a daily close below that price level.

For a look at all of today’s economic events, check out our economic calendar.

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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