Natural Gas Price Forecast: Double Top Risk Builds After Rejection

Rejection From Recent High Sets Near-Term Tone

Natural gas pulled back to a low of $3.21 on Friday after failing to advance above Thursday’s high of $3.38. Instead, Friday’s session established a lower daily high of $3.37 and a decline for the day. That high is now part of a potential double top bearish reversal pattern that would trigger on a drop below the recent higher swing low of $3.10 from Tuesday. That advance completed an 88.6% Fibonacci retracement of the prior decline at $3.38.

Key Resistance Cluster Near Moving Averages

Nonetheless, this recent swing high was followed by renewed strength earlier in the week, with additional testing of resistance near the 200-day moving average, now near $3.42. The top of the trend at $3.40 from Monday is now the key level that needs to be exceeded to signal a continuation of the rally. That should quickly be followed by a reclaim of the 200-day moving average. Otherwise, downward pressure may intensify with a test of support near the 100-day moving average at $3.15 and the higher swing low at $3.10.

Signs of Exhaustion After Extended Retracement

However, since the extended retracement of 88.6% was reached, along with the long-term dynamic trend indicator, and then followed by a lower swing high, it looks likely that a short-term rally high has been reached for natural gas.

Breakdown Confirmation Levels and Support Zones

A decisive decline below $3.10 would trigger a reversal of the advance and confirm a double top pattern. The next two lower potential support zones include the 20-day moving average, now at $3.06 and rising, followed by the more significant higher swing low at $2.86. That level can be watched for signs of support along with the slightly rising 50-day moving average around $2.86. There was one successful test of support near the 50-day average after it was reclaimed in early-May. Therefore, a second test may also see signs of support, possibly followed by strength.

Bigger Picture Structure and Trend Resolution

In the bigger picture, the current advance was a test of prior dynamic support as resistance, represented by the long-term uptrend line and the 200-day moving average. That process will be considered complete if a decline below the $3.10 swing low is triggered. But a decline below the higher swing low of $2.86 will confirm that bearish outlook.

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