Natural Gas Price Forecast: Can Bulls Break $3.44 Ceiling?

Trend Structure Holds Upward Bias into Resistance

Natural gas maintained an upward bias on Friday, while further testing a key resistance range near the 200-day moving average. Traders also switched to the new active front month of August. Trend structure has maintained a series of higher swing lows and higher swing highs, following the bullish reversal from a falling wedge pattern that triggered in late April. A high for the subsequent advance was established at $3.40, which remains the initial structural resistance level. Two advances followed, including this week, resulting in a series of lower high. That reflected downward pressure and confirmed a key resistance zone.

Lower High Formation at Critical Decision Point

Consequently, although there was a lower high established on Friday, it remains to be seen whether it will result in a swing high. That would be generated by a break below Thursday’s low of $3.20. Otherwise, short-term buying pressure may resume, with a potential breakout above Friday’s high near $3.38 remaining a near-term possibility. That may then trigger an advance above the trend high. Nonetheless, the potential move from an upside breakout looks limited, given potential resistance near the 200-day moving average, which is now near $3.44. That average has marked the resistance zone for the recent trend high, and it might do so again.

200-Day Moving Average Caps Momentum

More importantly, given the implications from trend structure, another test of resistance near the 200-day moving average should put natural gas closer to completing the counter-trend rally. After that, the larger trend context would show the possible completion of a pullback in a downtrend following the break below a long-term rising trendline. Once that process is complete, the developing downtrend may reassert itself. Whether that results in a test of the April lows or not, it certainly suggests the next key dynamic support zone, indicated by the 50-day moving average around $2.98, becomes an initial target.

Bearish Scenario Hinges on Moving Average Reclaim

The bearish scenario may begin to change if the 200-day moving average is reclaimed, first with a daily close above the average and followed by additional signs of strength. Although that would show strengthening, a bullish reversal of structure would not occur until natural gas rose above the lower swing high from March at $3.49. Until then, Friday’s upward bias into the 200-day moving average consistent with a market testing resistance rather than confirming a new bullish breakout.

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