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Natural Gas Price Forecast: Testing Support Amidst Low Volatility

By:
Bruce Powers
Published: Apr 12, 2024, 20:19 GMT+00:00

Natural gas is testing support around the downtrend line and 20-Day MA. Signs of strength are crucial if the rally off trend lows has a chance to continue.

In this article:

Natural gas dipped briefly below the minor 1.75 swing low from Monday before finding support at 1.73 and stalling the descent. Volatility diminished as it is on track to complete a narrow range day while further testing support around the long-term downtrend line and 20-Day MA, now at 1.76. If natural gas can advance above today’s high of 1.785 heading into next it has a chance to progress the near-term uptrend that starts from the higher swing low and potential second bottom (C).

A graph of stock market Description automatically generated with medium confidence

Drop Below Today’s Low Points to Lower Triangle Line

However, a drop below today’s low without a quick recovery increases the chance that natural gas will further trace out a developing symmetrical triangle (purple). A drop below today’s low increases the chance of a test of support at the lower boundary line of the triangle. Recent minor signs of strength seen recently as natural gas recaptured both the 20-Day and 50-Day MAs would then be negated.

Rally Above 1.785 Would Be First Sign of Strengthening

Nevertheless, if natural gas can continue to find support around the downtrend line and 20-Day MA, followed by signs of strength, it will likely have completed a minor pullback. The chance for an eventual bull trend continuation will then become more likely. A rally above today’s high of 1.785 will provide an initial signal, but upside follow through will be key as to whether it can keep rising from there.

Weekly Chart Analysis

On a weekly basis, natural gas is on track to close weak, in the lower third of the week’s range and possibly with a doji. The weekly candle will be bearish unless natural gas can rise before today’s close. Last week also ended relatively weak. This week will be the second in a row where natural gas is closing in the lower area of the week’s range. In both cases support for the week was seen in the 8-Week MA.

Natural gas has been mostly below the 8-Week line since early-January. So, a successful test of support at the 8-Week line is one sign of strength. Regardless, the weekly performance did not confirm strength since this week and last week ended (likely) in the lower part of the range. Therefore, a drop below today’s low would also give a weekly bearish signal relative to this week’s low and the 8-Week MA.

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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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