Navigating the Natural Gas Downturn: Analyzing Today’s Bearish Move

Natural Gas Forecast Video for 30.01.24 by Bruce Powers

It looks like a decision was made today in the price of natural gas and it is bearish. Natural gas began the week by opening with a large gap down, easily falling through several possible support levels including the 88.6% Fibonacci retracement, which was completed at 2.14. Yet, the price continued to fall. It is well on its way to testing and possibly exceeded prior support levels near trend lows from 2.03 to 1.95. At the time of this writing sellers remain in control with trading happening at the lows of the day.

Series of Lower Swing Highs Signaled Downside Pressure

Natural gas has been progressing its downtrend since the breakdown of a rising parallel trend channel, also a large bear flag, consolidation pattern on November 27. Subsequently, it found support at the 2.235 swing low in December and rallied to test prior support levels as resistance. A peak of 3.39 was reached in early-January, followed by a decline.

That peak generated a lower swing high and led to a drop to 2.31. Support was subsequently seen at 2.31 leading to a rally into last week’s interim swing high at 2.88. So, there is a series of lower swing highs in the chart for natural gas starting from the peak in October. When including last week’s swing high, an acceleration in downside momentum can be seen. Today, the bears kicked it into high gear with the gap down opening.

Falling Parallel Channel Breakdown Triggers

To add context to today’s decline, a falling parallel channel has been drawn on the chart in purple. The line originates from the top connecting two swing highs. A copy of the line is then attached to the most recent swing low at 2.235. You can see how the lower line was close to identifying the same price support area as the long-term downtrend line. The gap down today opened at the lower falling purple parallel line and the price of natural gas remains well below it. Moreover, today’s opening was just below potential support around the long-term downtrend line.

Monthly Breakdown: Today’s Decline Triggers a Bearish Shift, Surpassing Last Month’s Low

Further evidence supporting the bearish view can be seen in the monthly chart (not shown). Today’s decline triggered a bearish monthly breakdown as last month’s low at 2.235 was exceeded to the downside.

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