Natural Gas Price Forecast: Breaks Trendline, Eyes Key Support Levels

Natural gas triggered a breakdown of a rising trendline on Tuesday for the second time in three weeks. Trading continues near the lows of the day at the time of this writing with natural gas set to close below the line and confirm the breakdown. Also, notice that today’s high of $3.33 shows resistance was found at the trendline. A lower daily high and lower daily low was established today as natural gas heads towards a test of support near the most recent swing low at $3.15. The behavior around that price level should provide additional clues about the developing price patterns, along with prior support around 3.10. That is also a higher swing low.

Lower Trendline Prime Target

Those two swing lows are part of the construction of the uptrend price structure of higher swing highs and higher low. The $3.10 level carries greater weight as it is a little lower than the three-week low and a drop below it will confirm a double breakdown – through two key price levels. If the $3.10 level is decisively broken to the downside, it looks like natural gas would be heading towards a test of support near the long-term uptrend line (purple) that starts from the 2024 lows. It carries greater weight than a trendline by itself as it is the lower line of a large rising parallel trend channel. The top parallel line was recently confirmed on several occasions as resistance, eventually resulting in a bearish correction.

AVWAP Confirms Trendline Support Zone

Potential support around the uptrend line is enhanced by an AVWAP level (light blue) derived from the 2024 bottom. It is currently showing around $2.96. Notice that the long-term uptrend line was never confirmed by a third price point. The current decline could provide that trendline confirmation. Of course, there is also a chance that the price zone is broken to the downside, but on the first approach a bounce looks most likely. A successful test of support at the trendline would retain the higher swing low of $2.86 from April. It is a key part of the pattern of higher swing lows.

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