Natural Gas Price Forecast: Failed 200-Day Break Sparks Renewed Selling

Bearish Outside Day Forms After Failed Upside Breakout

Downward pressure on the price of natural gas dominated Thursday’s trading as early strength collapsed following a four-day high of $3.63. Subsequently, sellers took control and Wednesday’s low of $3.42 was broken, triggering a bearish outside day. That breakdown will confirm with a daily close below $3.42. In addition to reaching a four-day high, the 200-day average at $3.56 was also briefly reclaimed.

The potential bullish implications of those breakouts have been negated, putting the retracement low at $3.32 at risk of failure. At the time of writing sellers remain in control with trading continuing near the lows of the day, currently $3.37. In addition, natural gas is set to end the day’s session at its lowest closing price for the bearish correction, which is further confirmation of weakness.

200-Day Average Rejection Confirms Sellers in Control

Today’s rejection from the 200-day average for the second day in a row shows the bears remaining in charge and a failed attempt to turn higher. Failed breakouts often lead to sharp moves in the other direction. That is evidenced in today’s sharp selloff, which suggests that lower potential support levels may be tested before the correction completes. Confirmed resistance near the 200-day average is bearish behavior as it shows prior dynamic support switching to resistance. Once that happens, the potential for a bearish continuation of the trend is indicated.

Lower Support Targets and Long-Term Trendline Risks

A drop below the $3.32 trend low will quickly follow a breakdown of an internal dashed uptrend line at the bottom of a rising channel. The next lower target area looks to be around $3.27 to $3.24, consisting of a 78.6% projected target for a falling ABCD pattern and a 78.6% Fibonacci retracement level of the previous upswing, respectively. However, a long-term uptrend line that connects to the August swing low suggests that it could also be tested as support before the correction completes. That would put natural gas closer to the maximum decline for previous corrections since the 2024 bottom, which saw a decline of 41.7% following the March $4.90 peak.

Outlook: Downside Pressure Dominates Unless Reversal Triggers

In summary, today’s bearish reaction following resistance near the 200-day average suggests further downside pressure and the potential to reach lower targets. At the same time, failure to reach a new corrective low followed by an upside breakout above today’s high would trigger a bullish reversal for a counter-trend rally.

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