Natural Gas Price Forecast: Support Failure Signals Deeper Drop

Bearish Reversal Emerges After Failed Pennant

The recent bull pennant breakout in natural gas has shown signs of failure on Friday, with key near-term support levels being broken and invalidating the pattern. Signs of weakness began with a decline below the top boundary line of the pattern, after testing it as support on Thursday with the day’s low of $3.12.

Selling pressure subsequently intensified leading to a failure of support at a key near-term confluence zone. The lower pattern boundary, the 20-day moving average, the 38.2% Fibonacci retracement, and the 100-day moving average were all converging tightly, marking the low of the range near $3.05.

Key Support Zone Breaks Under Pressure

There was little hesitation near the potential support zone as natural gas fell right through it. It is set to confirm Friday’s breakdown by closing below that level. This puts natural gas on track to test support near the 50-day moving average, currently around $2.97 and possibly lower support levels. That zone is validated by the 50% retracement of the prior advance at $2.98 and prior structure support.

Lower Targets Come into Focus

However, given the decisive selling on Friday, the next lower target zone needs to be considered or even lower extensions if momentum persists. There is the confluence of the 61.8% Fibonacci at $2.90 and a higher swing low at $2.89. The lower 78.6% Fibonacci retracement at $2.79 would likely also provide a test of support near a lower uptrend line that connects to the January swing low.

Multi-Attempt Failure at Long-Term Resistance

Three recent advances, including this week’s move, attempted to reclaim the falling 200-day moving average, representing long-term dynamic resistance, and each failed. The other similar indicator is the uptrend line that connects to the August swing low. A bearish change in trend began in January on a break below the trendline. That was followed by a rally to test support near the 200-day line, then followed by a second decline below the trendline. A short upswing followed to test resistance near the trendline and 200-day average, resulting in a lower swing high at $3.49 and the top of a falling wedge pattern.

Momentum Fails Beneath Key Resistance

This week’s high price established a lower swing high that could end the current attempt to test key long-term dynamic resistance marked by the 200-day average near $3.43 and the uptrend line. The fact that the recent advance failed to reach the 200-day line is a sign of selling pressure. Instead, resistance was seen at the 78.6% Fibonacci retracement area, reinforcing the broader bearish continuation structure now forming after the failed breakout attempt.

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