Natural Gas Price Forecast: Struggles at Support Amid Bearish Correction Risks

Natural gas looks likely to end Wednesday’s session with an inside day as both the high and low of the day are contained within Tuesday’s trading range. And it is set to close in the red and likely in the lower third of the day’s range. At the time of this writing the high for the day was $4.18 and the low $3.95 and trading continues near the lows of the day.

Support for the day was found around an internal trendline and above the 38.2% Fibonacci retracement, which was reached on Monday at $3.91. These two lines are key to the uptrend that followed the $2.99 swing low that was established at the end of January.

Bullish if Remains Above $3.91 Support

If support remains above $3.91, natural gas may rise. Although a breakout above today’s high will show strength, an advance above Tuesday’s high at $4.19 would be a clearer bullish sign. Nonetheless, natural gas would be rising into a potential resistance zone that stopped the last two advances at $4.37 and $4.48, respectively. The rising internal trendline marks dynamic support for the uptrend and a bearish signal would be indicated on a decisive drop below that line.

Further Weakness Possible

Moreover, it would increase the risk that this week’s low of $3.91 fails as support and the price of natural gas goes down further. Since resistance was seen at the top of a large rising trend channel in the current advance and for the prior swing high, there is the possibility that the next lower trendline is eventually tested as support.

Either way, that possibility could lead to a notable bearish correction towards lower potential support levels. It is notable that since the 50-Day MA was reclaimed two weeks ago and there has not yet been a pullback to test the 50-Day line as support. That makes the 50-Day MA around $4.69 a potential target. But there are other price levels near the 50-Day line, which can be considered as well.

50-Day Moving Average Support Could be Tested

Although the 50% retracement at $3.73 is the next lower target if natural gas falls below $3.91, lower price levels converge between the 50% retracement and the 61.8% Fibonacci retracement level at $3.56. The 50-Day MA is included within that price area, as well as the 20-Day MA at $3.33, plus a weekly low at $3.55.

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