Navigating Natural Gas: Assessing Support Zones Amid Market Volatility

Natural Gas Forecast Video for 24.01.24 by Bruce Powers

Natural gas takes a rest on Tuesday as it is trades inside day following yesterday’s retest of the 78.6% Fibonacci retracement. Today’s low of 2.325 along with yesterday’s 2.31 low are nearby support levels. A decisive decline below 2.31 will signal a likely further drop in the price of natural gas. Nevertheless, it is sitting in a potential support zone defined by the uptrend line, the 78.6% retracement, and the prior swing low at 2.235.

Decision Point Reached

If yesterday’s low is broken to the downside there is a good chance that support would be seen around the lower 2.235 price area. Downward momentum began off the recent swing highs and natural gas has fallen as much as 31.9% since then. And the 3.39 swing high was only nine days ago. This points to the strong possibility that the correction may be over for now, leading to a tradeable bounce. Nevertheless, if the 2.235 level is breached, natural gas next targets the 88.6% Fibonacci retracement at 2.14. It may then keep falling as key lower levels start at 1.61 from 2016 and 1.44 from 2020.

Bear Trend Well Intact

Let us keep in mind that the downtrend in natural gas remains well intact and a new bearish signal was generated on the breakdown from the rising trend channel in late-February and then again on the failure to hold above the lower channel line most recently. Further, natural gas is back below its 200-Day MA (blue) after failing to stay above it twice over the past few months. Such signs of underlying weakness in the price of natural gas puts a test of trend lows from around 1.97 to 1.94 on the table if prices further weaken.

Rally Above 2.31 Signals Strength

Today’s inside day provides a setup as a bullish reversal is indicated on an advance above today’s 2.45 high. Further confirmation of strength is shown on a rally above yesterday’s high of 2.31 and further confirmed on a daily close above that price level. Moreover, a bullish hammer candlestick pattern may be completed today. That would provide supporting evidence for the potential strength of an inside day breakout.

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