Natural Gas Price Forecast: Breakout Signals Hint at Upside Momentum

Upside Breakout Confirmed

Natural gas confirmed the upside breakout of a bullish falling wedge reversal pattern on Friday. During the advance, strength was seen as the market reclaimed the 20-day moving average at $3.06, followed by a rise above Tuesday’s minor swing high of $3.19, and a trend reversal signal above the lower swing high at $3.25. In addition, a recovery of the long-term uptrend line occurred. The location of Friday’s closing price will determine which levels were confirmed as breakouts. Confirmation of a trend reversal would occur on a close above the lower swing high, as that forms part of the downtrend structure.

Recent Consolidation and Correction Context

Natural gas has been consolidating recently in a relatively bearish position below its long-term uptrend line. The low was $2.78 on February 26. That low ended a decline of $4.66 (62.7%) from the $7.44 peak in January. It was the largest bearish correction for the long-term uptrend that began following the 2024 bottom. This suggests that the character of natural gas may be changing.

Therefore, a continuation of Friday’s bullish move may struggle to sustain a rally to the upper boundary of the channel. The integrity of the channel was disturbed by the recent decline. There were two previous large bearish corrections that followed the 2024 low. The first completed a 40.6% decline, while the second saw a 46.5% decline, before buyers took back control, leading to a rally.

Bounce Toward Channel Midpoint

Friday’s bullish price action suggests a possible bounce back into a large rising trend channel, which should lead to a continuation toward at least the middle area of the channel. If that occurs, the 38.2% Fibonacci retracement of the full bearish correction that followed the $7.44 peak in January presents a lower upside target. That level would begin a series of higher upside targets, but nearer resistance levels would be encountered first.

Initial Upside Target and Resistance

The first upside target is near the lower swing high at $3.66, which marks the top of the falling wedge consolidation pattern. Nearby is the 200-day moving average at $3.56. It adds significance to a recovery above the $3.66 lower swing high, since that would further confirm a breakout above the 200-day moving average.

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