Natural Gas Price Forecast: Set for Further Declines Amid Bearish Correction

Lower prices look likely to remain on the agenda for natural gas given Tuesday’s bearish behavior. Although a new retracement low was not reached today, natural gas consolidated in a relatively narrow range inside day. The day’s trading activity was largely contained in the lower half of Monday’s trading range. This reflects continued downward pressure on the price of natural gas.

Accelerated Downtrend Remains Intact

The slope of the retracement accelerated following the June 26 high. Since then, price action has been contained below the lower downtrend line and the line has since been confirmed since by an additional touch with price. Therefore, the internal downtrend line can be used as a guide for initial trend resistance. The decline can be anticipated to continue until there is at least an advance above the trendline. So far, that has not happened, indicating that the downtrend remains in force.

Drop Below 2.15 is Bearish

A drop below yesterday’s low of 2.15 signals the likely continuation of the bear trend. The next lower support zone is identified around 2.02 to 2.00. Notice that an earlier bull breakout was confirmed on a rally above 2.00 on April 29. That was the top of a bottom symmetrical triangle consolidation pattern. Consequently, a full round trip will be completed at 2.00.

Since natural gas has gotten this close and given the continuing bearish signs, it seems very possible that 2.00 may be tested as support before the correction is complete. Nonetheless, this doesn’t mean it will be achieved. The market for natural gas will provide additional clues as it continues to evolve.

Interim Lower Target of 2.17

Prior to the 2.00 price target there is an interim target of 2.17. It is interim because the price level was resistance during a minor swing high on way up from the triangle bottom. As shown on the chart the 2.02 price level is indicated by a falling ABCD pattern. This pattern identifies symmetry between the two downswings. One labeled AB and the other CD.

An initial target from the pattern looks for a similar move in price for each leg of the pattern. Subsequently, additional targets can be found by incorporating a harmonic ratio to extend the completion of the CD target. A 127.2% ratio generated a target of 2.20, which was exceeded yesterday. Once that target failed to stop the decline, a second extended target was added. The extended target reaches its completion at 2.02.

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