Natural Gas Price Forecast: Rally Tests Major Resistance

Test of Key Resistance After Strong Weekly Advance

Natural gas bounced to a high of $3.66 on Friday, further testing resistance near the 200-day average at $3.64. Although a potential significant resistance zone has been reached, the week is set to end with the highest weekly and daily closing prices for natural gas in four weeks. This shows strength. But Thursday ended with a potentially bearish shooting star candle at resistance of the 200-day line. It could be an early sign of falling momentum.

Shooting Star Signals Potential Momentum Shift

A bearish shooting star reversal will trigger below Thursday’s low of $3.42 and confirm below Friday’s low at $3.41. This week’s advance is the first test of resistance at the 200-day average since it was broken late last year. Resistance is anticipated on the first approach. Subsequent behavior should provide clues about changes in supply and demand. Friday’s price action shows demand being retained, while a drop through $4.41 shows sellers taking control.

Support Levels Define Structure for Pullback or Continuation

Nonetheless, this week’s sharp advance shows strong buying, which may not be resolved with only one leg up from a bottom. It suggests that a second leg may follow a pullback, if it occurs. Key support levels to watch for a response are near Wednesday’s low of $3.11 and the 20-day average, also at $3.11 currently. Further down is previous resistance at the neckline of a double bottom pattern at $2.90. Given the wide range this week, natural gas could consolidate within the weekly range for some time before it is ready to make another attempt at reclaiming the 200-day line.

Upside Targets Aligned With Key Fibonacci Resistance

If a decisive breakout is triggered above $3.71, the 50% retracement at $4.80 becomes a target along with the 50-day average. Since the 50-day line is falling it will soon converge with the 50% level. Once the average falls below the retracement level, it takes on greater significance as potential dynamic resistance. So, if a new high is triggered, the 50-day average is the top potential target for now as it seems likely to show resistance. The current advance is the first test of resistance at the average since it failed in early December.

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