Natural Gas Price Forecast: Bullish Reversal Possible Above Key Support

Key Support and Current Setup

Natural gas is poised for an upside reversal from key long-term support if it can hold above this week’s low of $2.97. That low of $2.97 was a new corrective low that failed to find support at a long-term uptrend line and the previous swing low at $3.01 from January. The combination of the two indicators suggests strong potential support in this price zone. However, if the $3.01 fails as support and leads to a decisive drop below $2.97, a deeper and more significant correction may unfold.

Bullish Wedge and Breakout Triggers

A small bullish wedge has formed in the daily chart for natural gas. An initial upside breakout looks to be above this week’s high of $3.17, followed by more reliable lower swing high breakout trigger at $3.32. The top of the wedge at $3.66 and the 200-day average are the key resistance levels that need to be recaptured for natural gas to have a shot at higher prices.

Reversal Targets and Fibonacci Levels

If $3.66 is broken to the upside, another bullish reversal signal will occur. That would open higher targets, starting with the 38.2% Fibonacci retracement of the current downswing, at $4.68. Above, there is a 50% retracement target at $5.20. Be aware that the middle line of a rising channel may be nearby the 38.2% Fib and could provide additional context.

Downside Risk Still in Play

Despite the potential for a bullish reversal, natural gas remains vulnerable to a deeper bearish correction until there is a one-day reversal above today’s high, which triggers the wedge pattern. The January low was broken this week briefly and a daily close below that level will further confirm selling pressure, while a daily close below this week’s low at $2.97 would confirm a continuation of the bearish correction.

Oversold Position and Long-Term Context

Nonetheless, the price of natural gas was down 60.1% at this low, putting it in an overextended position to the downside. For comparison, the prior largest bearish correction since the 2024 was a decline of 46.5%. Relative weakness of the current decline suggests it may be more than a pullback in an uptrend. Also, be aware of the long-term downtrend line that marks the top boundary of a large falling bull wedge. The pullback to $3.01 was close to recognizing that line, while a drop below it may find support near it.

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