Natural Gas Faces Critical Support Breakdown: What’s Next for Prices?

Published: Nov 17, 2023, 21:53 UTC2min read
Natural gas faces a critical juncture as it breaks key support, with indicators suggesting a potential trend reversal. The lower trend channel line is now under scrutiny.
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Natural Gas Forecast Video for 20.11.23 by Bruce Powers

Natural gas breaks below key support and accelerates lower. It failed to hold support today that it has been testing for the past five days. A drop below the prior trend low at 2.99 triggered a sharp drop in price, with sellers clearly dominating throughout the session. Today’s price action occurred in a relatively wide trading range with the decline in price showing no signs of stopping. At the time of this writing, trading continues near the lows of the day.

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Heading Towards Lower Channel Line

It looks likely that natural gas will be testing support around the lower trend channel line. The decline today breaks two key trend indicators and follows the failure of the 200-Day EMA to maintain support. Both the 50-Day EMA and internal uptrend line were broken to the downside. This follows a valid attempt to stay above the 50-Day line since September 27. Not only can failed patterns lead to fast moves, but the rejection of the two moving averages puts the rising trend channel in natural gas at risk of failure. It’s not there yet, but a test is coming soon.

Natural Gas Targets 2.79

The lower boundary of the pattern, which represents dynamic support for the uptrend, is around the lower rising trendline. It is at a price of approximately 2.79 today. Not only is the lower line potential support but the line has been touched by price approximately six times. This makes it a very solid line, both for potential support, as well as given the significance of a breakdown. Following today, how natural gas behaves relative to the lower channel line will be key to identifying clues as to what might be coming next.

Given the failure of the rising trend to hold above the 50-Day EMA, there is a chance that a breakdown to below the trendline occurs. A bearish continuation would also provide an initial indication that the rising channel is breaking down after having failed to break up. You can see how each of the last two rallies tested the top channel line, which acted as resistance.

For a look at all of today’s economic events, check out our economic calendar.

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