Natural Gas Price Forecast: Rising Channel Defines Upside Potential

Natural gas advanced to a two-day high of $3.55 on Wednesday, as it tested resistance near the 200-day average. There is certainly a possibility that strength may continue, leading to a more direct test of that average, currently at $3.59. An advance above that average will be needed to indicate the potential for a sustained rally above the daily high, and this week’s high, at $3.74 from Monday. That lower weekly high is part of the trend structure. A daily close above those price levels will be needed to provide signs of strength in demand.

Natural gas futures daily chart shows one-day bounce below 200-day average

Rising Trendline and Channel Structure Define Support

Volatility in natural gas has spiked since the January bottom at $3.01. That low generated a higher swing low and confirmed a rising long-term trendline with a third anchor point. But that trendline is not only showing potential trend support. It also defines the lower boundary of a long-term rising trend channel. The parallel channel shows symmetry within the price swings, with a dashed centerline splitting the pattern in half and indicating a potential pivot area.

Natural gas futures weekly chart shows rising trend channel

Channel Symmetry Highlights Momentum and Risk Zones

The channel formation was confirmed during the recent sharp rally at a high of $3.44. Although the top line was broken, there was not a daily close above the channel to confirm strength indicated by the breakout. This week’s low of $3.16 has tested support near the bottom of the channel. The area around the bottom trendline will remain a key support zone for now. If it continues to hold, natural gas has a chance to continue to strengthen. But recent history suggests that once price starts advancing with momentum, it could accelerate.

Weekly Chart Signals Potential Bullish Reversal

On a weekly basis, there is a tail developing on a possible bull hammer bottom pattern for this week. A weekly closing price will determine the pattern. Once the high for the week is established, currently $3.74, it will mark a key pivot level. A sustained breakout above this week’s high would confirm strength on the weekly timeframe and provide evidence that demand is improving.

Upside Targets Identified by Structural Resistance Zones

If swings continue to show a relationship to the channel, initial upside targets have a better than normal chance of being tested as resistance. Possible resistance from structure shows from $4.59 to $4.69. Further up is the December peak at $5.50, followed by the January high at $7.44.