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Natural Gas Price Forecast: Key Support Levels Tested, Rally Potential Ahead Above 1.73
By: Bruce Powers | February 26, 2024

• Natural gas prices tested key support levels, indicating potential for a counter-trend rally with targets at 1.85 and 1.92. However, further confirmation of strength is needed first.

Last Friday natural gas retraced its prior advance to the 78.6% Fibonacci level before finding support at 1.58. Today, Monday, it found a higher support level at the day’s low of 1.59 and managed to exceed Friday’s high of 1.72 briefly before falling back into that day’s trading range. The high for today was 1.73. It is possible that Friday’s low completes a second test of support for the trend low hit last week at 1.52. That low completed a 58.2% decline from the 2023 peak at 3.64.



Advance Above 1.73 Shows Strengthening

A decisive rally above today’s high of 1.73 is a sign of strength and it will increase the chance that Friday’s low will retain support thereby clearing the way for a counter-trend rally. If so, a rising ABCD pattern can be considered for near-term targets. The ABCD pattern provides a couple nearby targets with the first at 1.85. It is interesting to note that the 20-Day MA (purple) at 1.84 is very close to the first target for the ABCD pattern at 1.85. Therefore, a daily close above 1.85 will also be a close above the 20-Day line. Once the 20-Day line is exceeded to the upside the outlook for the price of natural gas should improve, at least a little.

Next Upside Price Levels

The 127.2% extended ABCD target is at 1.92, just shy of the next identified resistance zone from around 1.95 to 2.04. The higher level is the 38.2% Fibonacci retracement, and the lower level was previously the bottom of the downtrend until it was broken on February 8. The 161.8% extended ABCD target confirms that price zone as it is within that range at 2.02.

Once the 20-Day line is exceeded a daily close above the prior trend low and low of the potential resistance zone at 1.95 is a sign of strength and points to a likely test of higher levels within the zone. As well, as price heads into the potential resistance zone the price of natural gas could turn down from somewhere within that price area. However, a daily close above 1.95 should make that less likely or increase the chance the advance may continue following a pullback or consolidation.

An advance above last week’s high of 1.79 will provide a more reliable bullish indication than a breakout above today’s high. That high was at resistance seen in September 2020 and it was followed by a sharp advance.

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