Natural Gas Price Forecast: Sellers Press Prices Toward Trend Support

200-Day Average Failed as Support

Sellers retained control in the price of natural gas on Tuesday, as it consolidated within a relatively narrow range. The price range for Tuesday was $3.17 to $3.40, and it formed near the lows of Monday. This suggests continued downward pressure as natural gas further tests support near Monday’s low of $3.16 and attempts a touch of support near the long-term uptrend line. Moreover, the 200-day average failed as support on Monday, confirming sellers in charge. Since it just occurred, a quick recovery of the line doesn’t seem likely.

Natural gas futures daily chart shows inside day at support (Source: TradingView)

The key level is $3.01

Nevertheless, natural gas is close to strong support near the uptrend line and above a higher swing low from January at $3.01. Since the line was recently confirmed by a touch of the January higher swing low, it has significance. The lower line also a lower boundary of a rising parallel trend channel. But the key level is $3.01. If that level fails as support, then a trend reversal signal is indicated. A series of higher swing lows at $2.89, $2.77, and $2.62, then become targets. Each level is also a monthly low, while $2.62 has added importance, as it marks a higher swing low that further anchors the long-term uptrend line.

Resistance Near the 200-Day Average at $3.59

Bounces have risk of resistance near the 200-day average at $3.59, particularly since the low of last Wednesday was at that average. Also, the level was defined by a swing high in October. Above the 200-day line is Monday’s lower daily high of $3.74. Above there triggers a daily reversal. This leaves a breakout above today’s high likely finding resistance near the 200-day average. Its subsequent behavior should provide clues about supply and demand and the possibility of reclaiming the 200-day average once again.

Natural gas futures weekly chart shows rising trend channel (Source: TradingView)

Correction From $7.44 May Be Close to Completing

Note that the peak in January at $7.44 was an overshoot of the top boundary of a rising trend channel. But resistance near the top of the channel did flip control to sellers and subsequently ended the week well into the channel paraments, reflecting a completion of the rally. A reversal from one side of the channel suggests a move to the other side. Now that the lower end of the parallel formation is being tested as support (the other side), the correction from the $7.44 may be close to completing. That is unless there is a failure of the channel signaled by a sustained drop below $2.62.