Natural Gas Price Forecast: Pulls Back After Six-Day Rally Stalls

The rise in natural gas faltered on Thursday after reaching a new high of $3.63 for the six-day advance. Resistance was seen just shy of the 50% retracement at $3.65. Sellers took control following the high for the remainder of the session and it looks likely that natural gas will close in the lower quarter of the day’s trading range. This would generate a potentially bearish shooting star candlestick pattern with a low of $5.52.

Notice that support for the day was around the 20-Day MA (purple) line and follows a breakout above the line on Wednesday. Either the test of support at the 20-Day line will hold and lead to a bullish reversal, or a pullback below the line may occur first. There was also the 50-Day MA around a similar price area, now at $3.54.

200-Day Line Support

Below the 20-Day and 50-Day lines is the 200-Day MA, now at $3.45. The 200-Day line was just reclaimed on Monday and has not been subsequently tested as support. That makes it a key potential downside target if today’s bearish pullback continues. There is also last week’s high resistance and now possibly support at $3.47.

Weekly Chart is Bullish

An overall near-term bullish outlook for natural gas is supported by the weekly chart (not shown). This week triggered a one-week bullish reversal above last week’s high of $3.47. The bull signal is confirmed by a weekly close above that level. That would increase confidence that a deeper pullback would likely be followed by a continuation to the upside. It is interesting to add that last week’s low bounced off support around the 50-Week MA, now at $3.27. That provided another bullish sign on the longer timeframe.

Higher Targets Start at $3.75

If the 50% retracement can eventually be exceeded, natural gas should rise to the next potential resistance zone identified from $3.75 to $3.84. Notice that the top of the range was tested as resistance a few times before and the bottom was an interim swing high from late-June. There is an AVWAP resistance line close to the 50% retracement. Therefore, a decisive breakout above the 50% level could lead to a relatively sharp advance up to the $3.75 price zone.

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