Natural Gas Price Forecast: Falls to Further Test Long-term Support

Natural gas pulled back to retest a recent support zone on Wednesday, reaching a low of $3.02 before stopping. Sellers remain in control with trading continuing near the lows of the day, at that time of this writing. Although a one-day bearish reversal triggered, the current support zone could continue to hold. Notice that today’s low hit a horizontal dotted line.

It represents a potential support area that was recognized by the market previously as either support or resistance. Also, notice that there has not yet been a daily close below that line during the bearish correction. Natural gas quickly recovered following a brief time below the line on Monday.

AVWAP Support at $2.96?

Key support is indicated by an anchored volume weighted average price (AVWAP) line around $2.96 currently. It is potentially significant given that it begins from the 2024 trend low and was proven as support twice since September 2024. This week is the third test of support around that AVWAP line since August 2024, with a low of $2.94 so far. But the fact that there is also a long-term rising trendline nearby provides additional evidence to support the possibility of a bullish reversal from this price zone. An attempt was begun yesterday to reverse higher, but today’s bearish action negates that bullish signal.

Below $2.96 Looks to $2.86

A decisive drop below $2.96 shows further weakening and the possible failure of the long-term support zone. If prices continue to fall thereafter, the next lower target zone will be from around a prior swing low of $2.86 to a 78.6% Fibonacci retracement level at $2.79. That target zone also includes a 78.6% projection for a falling ABCD pattern at $2.84.

Trend Channel Target Almost Complete

Let’s now consider a large rising parallel trend channel formation (purple) in natural gas. The top line of the channel was successfully tested as resistance several times since December showing that the market seems to recognize the area around the top of the channel. Once a reversal is established from one side of the channel, the possibility of the other side eventually being hit increases. Since natural gas has just about touched the lower channel line to test it as support, once it does the swing back to the other side from the top of the channel may be complete. That would open the door to a potential bullish reversal to set up.

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