Natural Gas Price Forecast: Bullish Signals Challenge Moving Averages

Resistance Holds After Initial Test

Natural gas remains stalled near the resistance of the 50-day moving average on Tuesday, following an initial test on Monday. This was anticipated. But given developing bullish signals, that moving average may eventually be reclaimed. Last week, an upside breakout of a falling wedge consolidation pattern was confirmed, along with the reclaim of key 10-day and 20-day moving averages. It was accompanied by a bullish reversal of structure as an interim lower swing high of $2.76 was recovered as well.

Support Base Builds Beneath Price

Those averages now represent potential support during weakness. A pullback to test support near the 20-day moving average at $2.68 is expected if Monday’s low of $2.75 is broken. That could lead to a pullback and consolidation that provides time for demand to build for another attempt at reclaiming the 50-day average, now at $2.86. The 50-day average has marked trend resistance since it failed as support late January. So, a decisive recovery of the line would show a change in character that should result in further upside. This ongoing test of resistance therefore highlights key inflection points for the next directional move.

Upside Targets Within Wedge Structure

The beginning of the wedge pattern at $3.49 provides an upside target, while the falling 200-day moving average at $3.42 points toward another potentially significant dynamic resistance zone. Since it is falling, it will soon fall below the long-term uptrend line, taking its place as a key level. The long-term trendline was broken in February and there was only one minor pullback since then. Last week’s wedge breakout began a second upswing toward prior trend support, now acting as resistance, to test it.

Fibonacci Extension Zone in Focus

The 78.6% Fibonacci retracement of the prior decline at $3.28 also provides a target zone. Keep in mind that the falling 200-day moving average will get closer to the retracement zone over time, adding to its potential significance as a possible resistance zone.

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