Natural Gas Price Forecast: Consolidation Near Lows Tests Bearish Resolve

Natural gas expanded it consolidation near recent trend lows on Monday, with another test of recent support. A six-day low of $2.69 was reached, while prior recent lows were near $2.68 and $2.67. This marks the beginning of the fourth week of consolidation unless a breakout from the recent range occurs. Last week’s lower swing high of $2.89 marks the top of the consolidation range. The repeated tests of support are keeping downside pressure in focus while also bringing the range closer to a potentially decisive breakout.

Natural gas futures daily chart shows continued downward pressure. Source: TradingView.

Bearish Pressure Builds Near Support

The consolidation pattern near the lows of the downtrend shows continued downward pressure, with the potential for a bearish signal. Attempts to reclaim the 20-day moving average have failed, and last week’s lower swing high extends the bearish trend structure. Also, an earlier uptrend line (dashed) has been successfully tested as resistance during recent consolidation. This follows its role as support just prior to the late July decline. The failed recovery attempts and resistance at the former uptrend line reinforce the bearish technical structure and leave support vulnerable to another breakdown.

Natural gas futures daily chart shows larger trend structure. Source: TradingView.

Break Below $2.67 Reopens Larger Downtrend

A decisive decline below $2.67 would indicate a continuation of the bearish trend and the likely break below the higher swing low of $2.65 from April. That would signal a continuation of the bearish trend beginning from the February swing high near $4.09. That downtrend structure is contained within a larger bearish trend structure beginning from the December peak of $5.02. Bearish continuation of the internal downtrend would therefore suggest an eventual continuation signal for the larger downtrend structure on a drop below the January low of $2.58. A break below $2.67 would therefore carry significance beyond the immediate consolidation, putting the larger bearish structure back into focus.

Rally Above $2.89 Could Shift Momentum

Alternatively, a decisive rally above last week’s high of $2.89 would be a sign of strength that could lead to further upside. A lower swing high from July at $2.98 is an initial upside target. However, the 50-day moving average will soon become a more important resistance level, since it is now near $2.98 and about to fall below the swing high. This would suggest an initial upside target near the 50-day moving average, with the lower high as a secondary upside target. Currently, the 50-day moving average is confirming bearish momentum by falling below the 100-day moving average. Therefore, the $2.67-$2.89 range remains pivotal. A break below support would reinforce the broader downtrend, while a break above resistance would provide the first meaningful sign that downside pressure is easing.