Natural Gas Price Forecast: Double Top Risks Build at $3.10

Momentum Stalls Near Resistance Confluence

Natural gas pulled back to test support near last week’s higher swing low of $3.10 on Monday, further developing a potential double top formation. Although a near-term uptrend price structure has been retained, it is now increasingly at risk of being challenged. The advance hit a high near $3.40 last Monday and then failed to sustain momentum, printing a slightly lower high of $3.38 on Thursday. Resistance was seen near a confluence of resistance at the 88.6% retracement of the prior decline at $3.38 and the 200-day moving average near $3.42.

Double Top Formation Nearing Confirmation Point

Since a key target zone has been reached, natural gas is in a position where a pullback or consolidation would be a common outcome. The second advance last week led to a lower swing high and established a potential double top pattern. A bearish trend reversal signal would occur on a drop below the neckline of the pattern at $3.10. The pattern needs to fully trigger though before it is valid and until then sets up potential reversal conditions.

Trend Support Layers Under Pressure

An earlier uptrend line failed as support on Monday and the 100-day moving average has been tested as support. However, the next key dynamic support indicator is the rising 20-day moving average near $3.08 currently. Along with the lower uptrend line, it defines key trend support. It may take on slightly greater significance soon as it is close to crossing above Monday’s low. In that case, a decline below the higher swing low of $3.10 may possibly occur after a breach of the 20-day average.

Lower Moving Averages Define Contingency Zone

The 20-day average was confirmed as support during the establishment of a higher swing low of $2.86 in late-May. It now lies near potential support indicated by the 50-day moving average, currently around $2.87. If the double top triggers and the 20-day moving average breaks, those two lower levels become targets. The 50-day average was confirmed once as support following a reclaim in May. Therefore, a second approach may also result in signs of support, or a failure of support near that indicator will confirm further weakening.

Neckline Break as Key Trend Decision Point

Overall, price action near the $3.10 neckline should provide some clarity, as a breakdown would shift focus from consolidation with a range toward a deeper corrective phase with the 20-day and 50-day moving averages acting as successive downside reference levels.

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