Natural Gas Price Forecast: Bullish Reversal Faces Key Resistance

Bullish Reversal Signals Emerging

Natural gas began to strengthen on Wednesday, with a one-day bullish reversal signaled off support at the 20-day moving average. Also, support represented by the 10-day average was close by at $3.01, and it recently began to turn up, showing improving short-term demand. Follow-through on the recent breakout of a falling bullish wedge has been limited. Resistance near a long-term uptrend line has been persistent.

Resistance Challenges and Pullback Completion

Nonetheless, the uptrend line was again challenged as resistance with Wednesday’s high of $3.22. A higher daily low of $3.02 bounced off support near both the 10-day and 20-day moving averages, showing improving demand. In addition, a daily close above Tuesday’s high of $3.15 will confirm the one-day bullish signal. It also indicates the likely completion of a minor pullback that followed Monday’s spike high of $3.49.

Monday’s high remains key near-term resistance, along with the nearby 50-day moving average at $3.53 and the 200-day moving average at $3.56. This sequence shows that natural gas is attempting to transition from short-term consolidation into a renewed bullish phase, though resistance remains a key barrier.

Support and Short-Term Price Structure

As of today, a slightly higher swing low at $2.96 was produced, providing a key near-term support area. The small advance of higher swing highs and higher swing lows that followed the February low of $2.76 could continue toward higher prices if the $2.96 support holds.

Upside Targets and Pattern Potential

An initial upside target suggested by the wedge pattern is the lower swing high and top of the wedge at $3.66. Downard pressure may persist until this $3.66 level is tested. Above there is another low swing high at $4.43 from January 30, followed by the 38.2% Fibonacci retracement at $4.56.

Downside Risks and Trend Considerations

Since natural gas remains under pressure near the uptrend line and bottom of a rising trend channel, a drop below $2.96 could lead to further weakness. Another minor swing low is then at $2.89, followed by the recent corrective low at $2.78. A decisive decline below that low could see the higher swing low and monthly low at $2.62 tested. Overall, the pattern shows that short-term support levels will dictate whether the ongoing minor advance can continue or if the downtrend from early January resumes.

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