Natural Gas Price Forecast: Extends Bearish Correction, Eyes 50-Day MA

Natural gas continued its bearish correction on Friday with a new retracement low of $3.83. It continues to trade near the lows of the day at the time of this writing and could reach lower prices before the end of the trading session.

Today’s decline confirms the breakdown from an internal rising trendline triggered yesterday, and the 38.2% Fibonacci retracement, which is at $3.91. The retracement level held as support for three days before a breakdown triggered yesterday. This puts natural gas in a position to challenge lower potential support levels.

50% Retracement at $3.73

The 50% retracement at $3.73 marks the beginning of a possible support zone that goes down to the 61.8% Fibonacci retracement level at $3.56. Last week’s low at $3.55 marked support for the week and is part of the uptrend price structure of higher weekly highs and higher lows.

It therefore has significance as a drop below it provides a bearish weekly signal and could lead to a drop towards the lower internal uptrend line. Since the weekly low aligns with the 61.8% retracement at $3.56, it deserves extra attention. In addition to a lower trendline target, there is a price zone from $3.32 to $3.31, consisting of the 20-Week MA and the 78.6% retracement, respectively.

Price Range From $4.73 to $3.56

Within the $3.73 to $3.56 price range is the 50-Day MA at $3.71. That looks to be the next key potential support level, particularly since the 20-Day MA has converged with the 50-Day as of today. Both moving averages are rising and are on track converge with the 50% retracement level. Unless there is a sharp drop before the end of today’s session, this week will end as an inside week with a closing price near the lows of the range.

Monthly Chart Shows Downward Pressure

Moreover, February ends today with the sixth consecutive month of higher monthly highs and higher monthly lows. However, the month is set to close in a relatively weak position near the midpoint of the month’s trading range, which is $3.82. The prior two months also ended in a relatively weak position, especially January, which closed near the lows for the month. In addition, the 50-Month MA was exceeded over the past few months but in each case the month ended below the 50-Month line, now at $3.85.

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