Natural gas futures slipped 2.6% to $2.645 per million British thermal units on Monday, extending losses after a bearish continuation pattern triggered a breakdown below the $2.70 level.
The five-hour chart confirmed a bear flag completion at $2.645, reinforcing downward momentum. The Relative Strength Index fell to 32.65, while the Money Flow Index dropped to 17.20, both signaling oversold conditions but within a broader bearish trend. The Average True Range widened to 0.0318, reflecting elevated intraday volatility.
Key support is seen at $2.616, which coincides with a potential double-bottom formation. A sustained break below this level could expose downside targets of $2.558, $2.500, and $2.450, with the latter representing a measured move projection. The Ichimoku Cloud resistance remains capped at $2.723-$2.724, while the 20-period simple moving average sits at $2.744.
For traders, the breakdown scenario offers a high-confidence short entry at $2.640, with a stop-loss at $2.688 and targets aligned to the $2.558-$2.500-$2.450 sequence. Risk-reward ratios for this approach range from 1.70 to 3.95, depending on the target tier. A more conservative short entry at $2.610 increases risk-reward ratios to as high as 6.89.
On the upside, a close above $2.744 would invalidate the bearish thesis, potentially shifting momentum toward the $2.800-$2.951 resistance zone. However, confidence in a bullish reversal remains low, with contrarian entries suggested only at $2.620 under a double-bottom scenario.
The technical breakdown follows a period of consolidation between $2.616 and $2.720, described as a "no-trade" chop zone. The MACD indicator showed a negative divergence, with the line at -0.0179 against a signal at -0.0021, further corroborating the bearish bias.
