Natural Gas Price Forecast: Bullish Pennant Near Breakout Zone

Wedge Breakout Sets Larger Technical Context

Following an upside breakout reversal signal from a falling wedge two weeks ago, natural gas hit a high of $3.18, thereby completing a 61.8% Fibonacci retracement of the prior decline and a successful test of resistance near a lower swing high of $3.19 from March. A relatively tight consolidation range followed near support at the 50-day moving average. Although it may not yet be fully formed, consolidation has taken the form of a small symmetrical triangle or bullish pennant continuation pattern.

Pennant Structure Points to Potential Continuation

Since the pennant formation was preceded by a sharp quick advance that followed the wedge breakout signal, referenced as the pole, a similar aggressive advance may follow a decisive upside breakout. An early breakout signal occurs above the minor swing high of $3.15, while a more reliable signal is a move above the top of the trend near $3.18.

Momentum Builds Beneath Key Moving Average

Given the structure of the pennant, there may yet be another pullback within the formation before a successful upside breakout triggers. Key dynamic support is represented by the 50-day and 20-day moving averages, currently near $2.98 and $2.97, respectively. Moreover, the 20-day line has converged with the 50-day, and it is about to cross above, which will provide a new sign of strengthening bullish momentum and improving sentiment. That will also solidify the significance of potential support near that zone. This convergence strengthens the broader technical base forming beneath current price action.

Layered Resistance Defines Upside Objectives

The upside target from the wedge pattern is its beginning at the lower swing high of $3.49. However, the 200-day moving average presents a potential significant resistance zone, currently a little lower near $3.43. There is also the 61.8% Fibonacci retracement at $3.52. A top initial target is defined by the long-term uptrend line, which used to represent support. It is currently around $3.56 and will represent higher prices in the future given its angle. Together, these levels define a layered resistance structure that will likely shape the next phase of price discovery if bullish momentum continues.

Critical Support Zone Maintains Bullish Structure

Key structure support near the recent higher swing low of $2.95 must be sustained for the bullish scenario to remain valid. An early indication of a potential failure of the pennant would be on a drop below Thursday’s slightly higher swing low of $3.00. Maintaining this support structure is therefore critical, as a breakdown would negate the pennant setup and shift focus back on a deeper consolidation or corrective action.

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