Natural Gas Price Forecast: Bullish Continuation Fails

Early Strength Faces Resistance

Earlier signs of strength in natural gas during Monday’s session give way to sellers. Natural gas confirmed strength earlier in Monday’s session with a breakout above Friday’s weekly high of $3.28. Also, a four-week high at $3.32 was surpassed until resistance was seen at $3.49, the high for the day.

Given the bearish response, that high completed a successful test of resistance a little below the 200-day moving average at $3.56. Also, Monday’s high was also right at resistance shown in the 10-week moving average on the weekly chart. Sellers took control following that high and remained so as the session closing approaches.

Testing Support After Breakout

The breakout above a four-week high provided an opportunity for buyers to sustain control after an upside breakout of a falling bullish wedge that triggered recently. Monday’s low of $3.04 was a direct test of support at the 20-day moving average. It is the low of the first full daily range above the 20-day moving average since it broke as support on January 28. This is a small bullish sign in the face of a bearish intraday behavior.

Key Support Levels

Key support is at the recent interim higher swing low of $2.89. However, short-term support is at Monday’s low, followed by Friday’s low at $2.95. Also, the 20-day moving average is now at $3.04. Natural gas has been facing continued downward pressure as it consolidated below a long-term uptrend line since mid-February. That line represents potentially significant resistance, but it must be considered along with the structure of the downtrend from the January peak and other indicators.

Unconfirmed Bullish Signals

An initial bullish trend reversal signal triggered on Friday above a lower swing high at $3.25. But it failed to confirm with a close above that high. The second reversal signal above that higher signaled today, but again, it will fail to confirm strength. This shows continued downward pressure. And since Monday’s high was close to the 200-day average, it gains added significance as another trend indicator along with the uptrend line.