Natural Gas Price Forecast: Rally Fades, Sellers Regain Short-Term Control

Natural Gas Stalls After Breakout Attempt

Natural gas advanced to a new high of $3.20 on Monday before retreating, ending the day weaker and signaling that recent momentum may be fading. The advance initially showed strength, breaking above the 50-Day moving average at $3.12 and setting a 32-day high. Resistance, however, was quickly found at the late-July swing high of $3.19, leading to an intraday pullback. At the time of writing, natural gas is trading in the lower half of its session range and looks set to close in a similar weak position.

Breakout Risks Turning into Failure

Although Monday’s breakout above the 50-Day line was encouraging, follow-through strength has been lacking. A daily close back below that level would signal a failed breakout, interpreted as a bearish sign. This increases the odds of a pullback to test lower support levels. The near-term trend remains fragile despite bullish signals that emerged two weeks ago, including a breakout from a falling wedge and the reclaiming of both the 20-Day moving average and a long-term anchored VWAP.

Weekly Chart Still Holds Bullish Reversal

On the broader timeframe, natural gas recently confirmed a bullish engulfing pattern on the weekly chart. That pattern triggered two weeks ago and was followed by a weekly close above $3.02 last week, marking a higher high and higher low on the weekly timeframe. While this is constructive for the bigger picture, the wide range of the engulfing pattern leaves room for a pullback to test support before any sustained advance higher.

Sellers Defend Key Resistance Levels

The current advance is also the first swing back to a long-term uptrend line that broke down on August 11. That line, along with the 50-Day average, is now acting as resistance. Sellers remain in control while price struggles to reclaim these levels. If weakness extends, support may first be tested at last week’s low of $2.87, a level that helped confirm the bullish weekly reversal. A breakdown there would risk further downside momentum.

For a look at all of today’s economic events, check out our economic calendar.