Natural Gas Price Forecast: Recovers Key Support After Brief Breakdown

Natural gas fell through key price support levels on Tuesday, but a quick recovery may negate the potential bearish implications. On the way down potential support at an uptrend line, 200-Day MA ($3.96), and 61.8% Fibonacci retracement level ($3.35) were broken briefly. A new pullback low of $3.29 was hit before support led to an intraday rally that might lead to a bullish hammer candlestick pattern for Tuesday. At the time of this writing, natural gas is trading above both the Fibonacci level and 200-Day line. A daily close above the 200-Day MA will confirm the potential one-day bullish recovery, but a stronger indication of strength would be on a closing price above Monday’s low of $3.42.

Signs of Oversold

The current bearish correction in natural gas has slightly exceeded the price decline and number of trading days seen in the prior bearish correction that started following the $3.84 swing high. That is a bearish indication but only if today’s low of $3.29 is broken. Otherwise, it indicates that natural gas is oversold and may have completed a bearish correction.

One-day Bullish Reversal Above $3.47

A decisive rally above today’s high of $3.47 will trigger a one-day bullish reversal from significant short-term support. That would put the price of natural gas back above the uptrend line for a potential bounce from the bottom of a rising trend channel. The first upside target is a lower swing high of $3.75, followed by an initial rally high of $3.84 that followed the April swing low. A recent trend high at $4.19 marks the next higher potential target.

200-Day Moving Average is Key

Given its long-term nature and wide use, another bounce from the bottom from the 200-Day MA has the potential to eventually challenge the 2025 high of $4.90. The recent activity of natural gas around the 200-Day Moving Average indicates an improvement in underlying demand. Notice that following the reclaim of the 200-Day line in September 2024, there have been four pullbacks to test the line as support, including the current correction. Although there was a dip below the line in the current and two prior tests, the recovery of the 200-Day MA has been steadily improving.

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