Natural Gas Price Forecast: Can Bulls Break $2.83 Resistance?

$2.83 Rejection Keeps Bulls Waiting

Natural gas failed to advance through a key short-term resistance zone on Thursday and instead weakened to a three-day low of $2.71. A lower daily high of $2.80 and the lower daily low suggest the pullback may continue into nearby lower support levels. The 20-day moving average and the recent lower swing high of $2.81 have defined a key resistance zone for the past several days, with that zone now extending to the slightly higher swing high of $2.83 reached on Wednesday.

That showed an unsuccessful attempt to trigger a bullish reversal signal above the lower swing high. Although it did not confirm with a daily close above, another attempt following this initial pullback could still result in a successful breakout.

Downtrend Remains Intact

The failure to recover the $2.83 level shows that the downtrend remains intact. It also adds to the significance of the pivot zone if there is a successful upside breakout later. If that swing high is recovered, a bullish reversal signal will trigger suggesting higher prices. However, any rally faces overhead resistance near the falling 100-day moving average at $2.92 and the 50-day moving average near $3.01.

The 100-day moving average marked resistance during the July advance and the 50-day moving average has not been fully tested as resistance since it broke to the downside in early July. Since the 50-day moving average is falling faster than the 100-day moving average, it will be getting closer to their similar price zone.

Moving Averages Could Cap a Recovery

Since an advance would be occurring within a larger downtrend structure, signs of resistance are likely to emerge near those moving averages. That could complete a counter-trend rally and result in another leg down to challenge support near the recent $2.62 low. Consequently, this lowers the potential for a recovery above the prior lower swing high at $2.99.

Still, a decisive move above $2.83 would change the immediate technical picture by confirming a bullish reversal and opening the door to a test of the moving-average resistance zone. Until that occurs, the recent failure at resistance keeps the downside scenario in focus, which makes $2.62 an important support level to watch.

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