Natural Gas Price Forecast: Signs of Weakness Emerge

Natural gas remains in a consolidation range that is starting to show further signs of weakness. Up until Wednesday natural gas was consistently running into resistance around the 20-Day MA. Then, on Thursday resistance was seen near the shorter 8-Day MA, which is more sensitive to price movements. This relationship reflects a weakening market.

Declining ABCD Pattern Points to 1.64

Nonetheless, the price of natural gas remains above the key near-term support level at 1.64. That price level is a swing low that is potentially part of the developing uptrend price structure of higher swing lows. If it fails to hold then natural gas would be moving into a declining ABCD pattern in the short-term (see chart). An early downside target of 1.55 is identified as it completes 61.8% of the price decline seen in the first AB leg down. Similarly, using the 78.6% Fibonacci ratio arrives at 1.49, which happens to match a second Fibonacci extension price. A 127.2% extension of the full advance up from the prior trend low hit in April 2023, is also 1.49. Both a short and long-term Fibonacci measurement points to the same price target.

Fibonacci Says 1.49

We could see an undercut and run strategy set up if the 1.49 level is reached. It is under the most recent trend low of 1.52 and above the historical low of 1.44. It would be a perfect spot to see a bullish reversal once stops get hit from the decline below 1.52. Two Fibonacci levels lining perfectly like that is the market telling us to pay attention. An undercut and run strategy first looks for a continuation of the dominant near-term trend, which takes out weak holders and triggers stops. If price quickly reverses (relative) and closes above the prior trend low, it gives a strong bullish signal. Keep in mind that this is an aggressive strategy.

Weekly Price Levels

In the near-term, if the 1.64 level is broken and the price of natural gas continues to decline. Note that such a drop would also trigger a bearish continuation on the weekly chart. The four-week low of 1.59 would then provide the next lower target in the weekly time frame.

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