Natural gas has been in a steady downtrend since early May, with price recently breaching below the key 0.5 Fibonacci level at $3.084. The commodity is currently trading around $3.104, showing signs of possible stabilization after a sharp decline.

The price action has formed a potential bottoming pattern near the 0.618 Fibonacci level at $2.926, which appears to be providing immediate support. This level is crucial as a confirmed breakdown below it could accelerate the decline toward the 0.764 Fib at $2.730, with the 1.0 Fibonacci level at $2.414 serving as the ultimate downside target.

Looking at the moving averages, the blue 100 SMA remains below the red 200 SMA, confirming that the path of least resistance is to the downside. These moving averages are likely to act as dynamic resistance levels during any attempted recovery, with the 100 SMA around $3.242 (the 0.382 Fibonacci level) being the first significant barrier.

A bounce back above the 38.2% Fib could lead to a move up to the $3.500 major psychological mark near the moving averages or a recovery to the swing high at $3.755 then the $4.000 handle next.

The stochastic oscillator is approaching oversold territory but hasn’t quite reached extreme levels, suggesting there could be more downside in the near term before a meaningful bounce occurs. This indicator’s trajectory shows a continuation of bearish momentum, though it appears to be flattening somewhat.

Meanwhile, the RSI has declined sharply and is now hovering near the 30 level, indicating the commodity is approaching oversold conditions. While this suggests that selling pressure could soon exhaust itself, the downward slope remains intact for now.

The recent Moody’s downgrade on the US credit rating appears to be keeping USD on the back foot compared to risk assets like commodities, while geopolitical tensions in Israel and between Russia and Ukraine could continue to keep energy assets supported on global supply concerns.