Natural Gas Price Forecast: Resistance Holds as Breakdown Risk Grows

Resistance Remains Firm

Natural gas successfully tested resistance near the 10-day moving average for the second consecutive day on Tuesday, as it established a higher daily low of $3.12 and reached a higher high of $3.21. That resulted in further confirmation of resistance near the average, followed by an intraday pullback. Both the neckline of a potential double top pattern at $3.10 and the area around the 100-day moving average at $3.15 continue to act as support. In addition, the 20-day moving average near $3.09 is rising and will soon cross above the $3.10 zone, further reinforcing the support zone.

Double Top or Continued Consolidation?

A decisive advance above Tuesday’s high would trigger a reclaim of the 10-day average near $3.22 and extend the current consolidation phase, which is presently identified as a potential double top pattern. However, because the 20-day average may soon rise above the higher swing low and neckline at $3.10, the validity of the pattern will increasingly depend on whether support can be maintained. That would suggest either that the double top formation evolves into a different pattern or that the double top is triggered through a concurrent failure of support at the 20-day average.

Downside Levels to Watch

Since the 20-day average was confirmed as support during the prior pullback, a failure below it would point to a deeper pullback, which would likely target the 50-day moving average, currently near $2.87. The higher swing low from May at $2.86 is also a nearby downside target.

Support Holds the Key

Retention of support near the 100-day moving average shows underlying buying pressure that could lead to another leg up in the current uptrend or an extended period of consolidation if support remains intact. However, the advance from the April low reached a high of $3.40 and fulfilled two potential higher targets last week, including the 88.6% Fibonacci retracement of the prior decline and the 200-day moving average, suggesting that the recent rally may have reached at least an interim peak if not the high.

As noted at the start, repeated recognition of resistance near the 10-day average marks it key short-term resistance. Meanwhile, support is clearly established near $3.10 and is set to be reinforced by the rising 20-day moving average. With both resistance and support well defined, natural gas appears close to a decisive move, with a bearish reversal signal favored if support fails.

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