Natural Gas Price Forecast: Rally Extends Toward Resistance Zone

Bullish Breakout Extends Toward First Target Zone

Natural gas reached its first upside target zone on Thursday, as it triggered a continuation of the bull trend above $3.15 and advanced to a high of $3.29. A 78.6% Fibonacci retracement at $3.28 was completed during the advance. During the advance, the 100-day moving average at $3.16 was reclaimed for the first time since late January, confirming strength of the ongoing advance. Buyers remain in control at time of writing, and it looks likely that the day’s session will end in the top third of the day’s range. This shows continued strength and therefore could lead to further upside in the near-term.

Resistance Zone Builds Toward 200-Day Average Confluence

The 78.6% retracement zone now marks the start of a potential resistance zone up to the 200-day moving average, now near $3.41. Since the 100-day moving average has now been reclaimed, the probability of eventually testing resistance near the 200-day average has increased. The 200-day average is joined by the long-term uptrend line that was broken in early February.

This will be the third pullback to test the former dynamic support indicator as resistance, further reinforcing its technical significance. Resistance represented by the trendline adds to the potential significance of the 200-day average price zone as a confluence area of interest.

Channel Structure After Falling Wedge Reversal

A bullish reversal from a falling wedge pattern began the current advance with a late April breakout. The subsequent advance has formed a rising trend channel. The top boundary of the channel represents possible resistance. Note that price action has respected this upper channel boundary, suggesting it may continue to act as a near-term cap on rallies. A slightly higher target is near the beginning of the falling wedge at $3.49.

Support Levels in Case of Pullback Pressure

If a pullback occurs before new highs, watch for support near the 100-day moving average and Wednesday’s high, at $3.16 and $3.15, respectively. However, in the event of a deeper pullback, the lower rising channel line is a potential target. A minimum 38.2% Fibonacci retracement of the current upswing is at $3.13, which would represent a normal corrective move within the broader bullish structure.

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