Natural Gas Price Forecast: Channel Support Signals Bullish Reversal Risk

200-Day Average Caps Price as Sellers Reappear

Natural gas continued to trade stuck below resistance defined by the 200-day average. Friday established a higher daily low of $3.41 and higher high of $3.66. Once resistance was found slightly above the 200-day average, now at $3.60, sellers took back control. Trading continues near the lows of the day with a hanging man candle pattern to be generated for the day.

Long-Term Channel Support Reinforces Bullish Structure

A drop through Friday’s low will trigger the bearish hanging man and establish a lower swing high at resistance of the 200-day average. This is a bearish pattern and suggests continuation lower. However, the bigger picture shows strong support nearby marked by the rising long-term rising trendline and this week’s low of $3.16. That trendline was recently reconfirmed as dynamic support with a third anchor point in January. Moreover, it represents the lower boundary of a rising channel. The channel formation was confirmed by both the January low and high that followed.

Bullish Reversal Triggers and Confirmation Levels

The larger and therefore dominant pattern in the chart of natural gas suggests that support near the bottom of the channel is sustained, resulting in a bullish reversal signal and a rally. Although a recovery of the 200-day average would a sign of strength, a bullish reversal of structure triggers above this week’s high of $3.74. A rise above the high will trigger a one-week reversal off strong support near the bottom of a large trend channel.

Upside Targets Defined by Fibonacci and Prior Highs

A variety of upside targets begin with the 38.2% Fibonacci retracement of $4.79. That level is followed by a swing high at $4.90 from March. An important target zone is also near $5.32, as it was the neckline of a large double top from 2022. It is joined by a 50% retracement level at $5.30 and an interim swing high at $5.50.

Channel Structure Sets Minimum Recovery Expectations

Unless there is a sustained bearish decline below the recent higher swing low at $3.01, the price of natural gas is expected to strengthen towards the middle of the channel, at a minimum. That is the minimum anticipated advance once a bullish reversal signal confirms.

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