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Natural Gas Bearish Momentum Targets Lower Fibonacci Levels
By: Bruce Powers | March 12, 2024

• Natural gas price action shows bears in control as it retraces further, with potential to test recent lows around 1.58 to 1.52, unless a bullish reversal occurs.

Natural gas further retraces its recent advance, falling to the 61.8% Fibonacci retracement with the day’s low of 1.69. Downward pressure remains as continues to trade near the lows of the day at the time of this writing. If it keeps falling the next Fibonacci level at 1.63 becomes the likely next lower target. That price is the 78.6% Fibonacci retracement level. Today’s price action shows the bears in charge and aligned with the larger bearish trend.



Bears Remain in Control

A bearish continuation of the long-term downtrend, begun from the August 2023 peak at 10.03, triggered initially on December 4 with a breakdown from a rising parallel trend channel. Further confirmation for the continuation of the bear trend to a new trend low triggered on February 8. Subsequently, support was eventually found at the 1.52 trend low seen several weeks ago. That low led to a rally to test resistance where support was seen earlier in February and April 2023. It was in a range from 1.95 to 1.97. The high of the recent counter-trend rally was 2.01.

Counter-Trend Rally Confirms Bearish Price Structure

The critical resistance zone around 1.95 to 1.97 was clearly tested and price was rejected to the downside from the 2.01 high. Note that the highest daily close during the advance was at 1.95. That seems to indicate that the market recognized the price range. Last week’s high not only successfully tested resistance near prior trend lows. The lower boundary of a falling parallel channel was also successfully tested as resistance. That channel is marked with dashed blue lines. Similarly, the bottom of the channel was clearly resistance following the gap down on January 29.

78.6% Retracement Looks More Likely

To summarize, during the recent countertrend rally natural gas hit resistance at key prior support zones. This is common bearish behavior within the progression of a downtrend. Therefore, since the pullback from the 2.01 high is retracing further, the potential to test recent lows around 1.58 to 1.52 increases. The possibility of natural gas falling below 1.52 remains a possibility. Nevertheless, a clear bullish reversal from the 61.8% or 78.6% retracement zones will put the countertrend rally back in play. As noted yesterday, it may just be that the rally is expanding its swings so that the pattern creates a C point on a rising ABCD pattern.

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