Natural Gas Price Forecast: Breakdown Fails as Reversal Builds

Support Test at Trendline Defines Near-Term Direction

Natural gas dipped below the 20-day moving average during Wednesday’s session, reaching a 12-day low of $2.90 before bouncing. Support for the day was seen near a short-term uptrend line connecting to the higher swing low in February at $2.81. The subsequent intraday bounce resulted in a bullish hammer candlestick pattern and a likely new higher swing low. This bullish price action resulted in a recovery of both the 20-day and 50-day moving averages by the session close.

Range Structure Between Trendlines Tightens

Unless there is bearish follow-through below $2.90, which would confirm a break of support at the rising trendline, natural gas is primed to consolidate above that trendline and below a downtrend line. The top line marks dynamic resistance of the decline from the December peak at $5.02. Resistance near the downtrend line was successfully tested with last week’s lower swing high at $3.49. That high also tested resistance near a long-term uptrend line.

Market Structure Shift Raises Bearish Risk

Given the slope of the longer uptrend line, the downtrend line could be broken and followed by higher prices, while natural gas remains under resistance marked by the longer rising trendline. However, a higher swing low from August was also broken following an initial drop below the uptrend line, highlighting a shift in market structure. That shows the risk of a bearish trend reversal is increasing. Moreover, the 200-day moving average is now at $3.55 and falling. It is about to cross below the long-term uptrend line, marking a potentially significant dynamic resistance area that will be below the trendline.

200-Day Average Caps Upside Attempts

The 200-day average represents a key dynamic resistance area, reinforcing downside pressure while price remains below it. Natural gas may remain under pressure while below that average. Given a one-day bullish candle for Wednesday, a rally above the day’s high of $3.05 will signal a one-day bullish reversal and a failed breakdown. A recovery above the interim swing high at $3.29 would suggest a rise to test resistance near the 50% retracement at $3.45 and the lower swing high at $3.49, bringing the analysis back to the key resistance zones identified earlier and reinforcing the importance of the broader consolidation range.

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