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Natural Gas Price Forecast: Bearish Continuation or Reversal Signaled?
By: Bruce Powers | February 16, 2024

• Natural gas prices showed a minor shift today, ending an eight-day pattern of new lows. Despite this, the bear trend remains strong, with potential for further downside.

There was a minor change today in the pattern of declining prices seen over the past couple of weeks. On Friday, today, the price of natural gas ended a consecutive decline of eight days with lower daily highs and lower daily lows. Natural gas is on track to complete Friday with an inside day. This doesn’t diminish the bear trend, just presents a one-day pause. Nonetheless, it reflects a slight decrease in downward momentum. Regardless, the downtrend remains well intact, and the expectation is for a bearish continuation signal leads to lower prices for natural gas.



Drop Below 1,573 Signals Lower Prices

A drop below today’s low of 1.575 will signal a likely bearish continuation of the downtrend. Likely, because there needs to be downside follow through to further confirm weakness. Yesterday’s low of 1.573 would also need to be exceeded to the downside. Notice that today’s price range is relatively narrow, and it is contained in the lower half of yesterday’s range, reflecting remaining selling pressure.

Strength Will be Indicated on Advance Above 1.64

Nevertheless, natural gas has been testing a support zone for the past few days. If there is a decisive rally above today’s high of 1.64, it will indicate strengthening. But a bullish reversal with some legs will need to start with a decisive advance above yesterday’s high of 1.67. A daily close above that price level will confirm strength thereby opening the door to higher prices. A rally above yesterday’s high could be sharp as the decline was relatively fast. This doesn’t mean it will be, just that it could be and to be on the lookout. Historically, you can see on the chart how bottoms have frequently led to sharp reversals over the past year.

Daily Close Above 1.67 Confirms Strength

If a daily close above 1.67 occurs, natural gas will then have a decent chance of rising to test prior support levels as resistance. In addition, there is a gap starting at 2.17 on January 29 that has not been filled. A confirmed bullish reversal should, at a minimum, pullback to test the prior trend lows at a range from 1.95 to 1.97. That zone was previously the lows for the downtrend. In addition, the previous swing low at 2.31 is a potential target.

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