Natural Gas Price Forecast: Failed Breakout Signals Deeper Decline

Sellers Seize Control with Decisive Breakdown

Natural gas took a beating on Thursday as sellers smashed through two pivotal short-term support levels: the 10-day moving average and the recent swing low at $3.30. This level, marking the neckline of a small double top pattern, followed a failed second attempt at an upside breakout, which produced a slightly lower swing high last week.

The breakdown below $3.30, coupled with a breach of a long-term uptrend line, signals potential trouble. A daily close below these levels — gas is currently trading near the day’s low at $3.24—would confirm the bearish reversal and solidify a lower swing high, showing growing bearish momentum.

Resistance and Bearish Signals Mount

The rejection at the 200-day moving average underscores its role as a formidable resistance area. This was the first test of the 200-day line as resistance since it flipped from support in late July, amplifying the bearish implications of today’s price action. Prices lingering near the session’s lows suggest a close below the 10-day average, the $3.30 neckline, and the uptrend line, locking in the bearish outlook. This setup hints at more than a fleeting pullback, especially given the failure of a bullish breakout attempt, which often triggers sharp moves in the opposite direction.

Downside Targets in Focus

A short-term rising channel highlights a minimum downside target near the channel’s midpoint, coinciding with the 20-day moving average at $3.15. However, the magnitude of today’s reversal raises the possibility of a deeper slide toward the channel’s lower boundary or the 50-day moving average at $3.03—a key dynamic support reclaimed in late September. The first test of the 50-day as support, after serving as resistance, should attract buyers, but a failure there could accelerate losses. The broader falling channel pattern, now marked by a failed bullish breakout, supports the case for further pressure from the bears.

Weekly Chart Reinforces Bearish Bias

The weekly chart aligns with the bearish daily chart, with natural gas poised to close near the week’s lows and forming a bearish inverted hammer inside last week’s range. This pattern strengthens the case for sustained selling. A decisive rally above this week’s high of $3.35 would challenge the bearish thesis, but for now, sellers hold the reins. Watch Friday’s close for confirmation—$3.15 looms as the next battleground.

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