Natural Gas Price Forecast: Breakdown Opens Lower Targets

Bearish Breakdown Confirmed

A continuation of the bear trend in natural gas was confirmed on Friday with a drop below the prior low and beneath a trendline, reaching $2.65 for the session. The breakdown below $2.71 is likely to lead to a bearish continuation toward lower support levels. Natural gas is set to end the week at its second lowest weekly closing price in 19 months, surpassed only by the lower close in the first week of January. Sellers have taken control and remain in control heading into the weekend.

Lower Targets Come into Focus

The next lower target price begins with the January swing low near $2.58. However, that level is expected to be broken, which would trigger a continuation of the bearish trend that followed the December peak of $5.02, as a lower swing lower will be generated. This would increase the likelihood of lower potential targets being reached.

Once the $2.58 level is cleared to the downside, the 78.6% Fibonacci retracement of the full uptrend that began following the 2024 bottom becomes a target near $2.32. Further down is a relatively large potential support range from around $2.17 to $1.98, derived from a 127.2% Fibonacci extension of the prior advance and the 88.6% Fibonacci retracement of the long-term uptrend, respectively. There is also price structure from approximately $2.15 down to $1.99, adding confluence to that broader support zone.

Resistance Levels Define the Reversal Path

The prior trend low at $2.72 is now near-term resistance that may be tested as resistance during short-term strength. More significant resistance, however, sits at the lower swing high of $2.91, as a recovery of that level will trigger a bullish reversal of the very short-term downtrend and confirm a reclaim of the 20-day moving average, now at $2.87 and falling.

Volatility Returns to the Market

Before the recent consolidation, which followed the interim swing low of $2.81 from late-February, natural gas exhibited very high volatility through an upswing, a downswing, and another upswing that ended with a lower swing high in January. Now that natural gas has broken out of that recent consolidation, the potential for spikes in volatility has returned. This is why the lower 88.6% retracement is noted, as it seems far away now but could quickly come into view if downside momentum accelerates. This is not a prediction, just an observation. As with the breakdown that opened this analysis, price action remains the deciding factor – and it will lead the way.

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