Natural Gas Price Forecast: Rally Extends Toward 50-Day Average Resistance

Natural Gas Extends Counter-Trend Rally

Natural gas extended its counter-trend advance on Wednesday, reaching an intraday high of $3.13 before encountering resistance. That test aligned with a long-term uptrend line that was broken to the downside earlier in August, while also nearing the 50-Day moving average, now at $3.15. Momentum remained with buyers as the session looked poised to record the highest daily close in 21 sessions. A daily close above Tuesday’s high of $3.07 would further reinforce near-term strength.

Support Holds at Key AVWAP Indicator

The session low of $2.96 was a higher daily low and marked a successful test of support around the anchored volume-weighted average price (AVWAP) from the 2024 trend bottom. After several failed attempts to sustain a breakout above that level, Wednesday’s bullish action cleared the AVWAP zone convincingly. It was the first day where the full range of the session was above that AVWAP. This follows a string of technical improvements beginning last Thursday with a break of the 20-Day moving average, a trendline breakout, and a move through the center line of a descending channel.

Convergence of Resistance Levels Ahead

Despite the recent bullish momentum, natural gas faces a confluence of potentially significant resistance. This includes the falling 50-Day average and two prior swing highs, all clustered between $3.15 and $3.19. The 50-Day moving average is particularly noteworthy as this marks the first test of the indicator as resistance since it failed as support in late June. The fact that the average is declining may shift resistance slightly lower, but it still represents the most important barrier to watch. A daily close above this level would be required before higher objectives can be considered.

Outlook Hinges on Trendline Reversal

A decisive move above the resistance cluster would also represent a failed breakdown from the long-term uptrend line. Traders should remain aware, however, that natural gas could continue to grind higher in the coming weeks while still trading beneath that angled uptrend line. For now, momentum favors the bulls, but the upcoming test of the 50-Day average will likely determine whether the counter-trend rally extends toward higher levels or stalls beneath resistance.

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