Natural Gas Forecast: $2.86 Breakout Could Target $3.25

Trend Support Holds

Natural gas further tested key trend support on Friday, trading largely inside Thursday’s range but with an upward bias. A higher daily low of $2.77 is now key short-term support, while the day’s high of $2.85 is notable resistance. On Thursday, natural gas generated a bullish hammer candlestick pattern, with a breakout triggered above the session’s high of $2.84. Although Friday’s advance briefly triggered that breakout, it didn’t get far and was not confirmed. Friday’s price action also formed a bullish hammer pattern, leaving two consecutive sessions with bullish reversal candles near trend support.

The two hammer patterns show tails that indicate breaks below support near the uptrend line at the lower boundary of a rising channel. However, on both days, natural gas closed above the trendline, showing an intraday recovery and continued retention of support near the line. Moreover, the 20-day moving average provides an area of dynamic support and has also been tested recently. It may be significant that the 20-day moving average near $2.84 aligns with the highs for the past two days. That alignment reinforces the resistance area, which could make a decisive breakout more significant and potentially lead to a stronger move.

Moving Averages Tighten Resistance Zone

There is also the 50-day moving average, which is now near $2.86 and rapidly falling towards the resistance zone. This will also add to the significance of the zone. If a decisive breakout above the $2.85 to $2.86 range occurs, then natural gas would be showing signs of a second leg up from the August lows and could eventually target the downtrend line at the upper channel boundary.

Upside Targets Extend Toward $3.25

An initial upside target would be the recent swing high of $3.03, followed by a 61.8% Fibonacci retracement of the prior decline at $3.09. Nonetheless, the next significant upside target zone is from the 78.6% Fibonacci retracement at $3.21 to the 200-day moving average at $3.25.

$2.75 Breakdown Would Shift the Setup

Alternatively, a decisive decline below $2.75 would be bearish and likely lead to a test and possible failure of support at the recent lows of $2.62. That could be viewed as a breakdown from a bearish flag pattern, if it occurred. For now, however, the consecutive bullish hammer patterns and successful tests of trend support keep the focus on whether natural gas can reclaim the $2.85 to $2.86 resistance zone and confirm a second leg higher.

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