Natural Gas Price Forecast: Sellers Stay in Control; $2.96 Support Now in Focus

Natural gas remained near the lows for the week on Friday as it further consolidated following Thursday’s narrow range day. The current high to low range of $3.15 to $3.07 is contained within Thursday’s range, putting natural gas in a position to complete a double inside day. If the day ends with a similar pattern, a small bear pennant will be formed, suggesting a continuation of the decline. Therefore, this week is on track to end with natural gas in a relatively weak position near the lows for the week, indicating the sellers remain in charge.

Two Lower Target Zones

A continuation of the bear trend was signaled this week on a drop below the $3.14 lower swing low (B), and a bearish reversal triggered on a decline below the $3.10 higher swing low from May 19. One or both bearish signals may confirm on a weekly basis if today’s closing price is below the first or both levels. Subsequently, there are two lower target zones as shown on the chart. The first is near a long-term AVWAP line (light blue) at around $2.96.

It began from the 2024 low and was successfully tested as support twice previously, in April and October. Both instances led to sharp recoveries. The potential to see support around that AVWAP level is enhanced by a long-term rising trendline that indicates potential support around the same price area.

Support Near Converging Lines

The AVWAP is converging with the trendline at a time that it might be tested as support. This could increase the chance that it is reached before the current decline finds a sustainable bottom. Nonetheless, if the $2.96 price zone fails to hold as support, the next lower potential support zone looks to be around $2.86 to $2.79. The first level is the April swing low and the second is a 78.6% retracement level. A decisive decline below today’s low will trigger the bear flag, while a drop below this week’s low of $3.06 will further confirm.

Bullish Reversal Above $3.17

Despite the signs for a bearish continuation, a potential upside reversal is signaled on a decisive rally above today’s high, and further above the two-day high of $3.17. Wednesday’s high of $3.27 would be the next potential resistance level, followed by an internal rising trendline that previously represented dynamic support.

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