Natural Gas Price Forecast: Support Holds as Wedge Tightens

Support Holding Firm

Natural gas continued to hold support, establishing a trend low of $2.56 during Thursday’s session, while triggering a one-day bearish reversal. This short-term sign of strength follows a test of support near a long-term trendline that has represented a support zone twice in the past. Although one day of strength doesn’t represent much unless it is followed by further signs of strength, the market has shown recognition of that support near the trendline over the past couple of days. Therefore, it may continue to hold above the trend low of $2.56 and could lead to a bounce into short-term trend resistance, reinforcing the idea introduced at the start that support is actively being defended.

Resistance and Pattern Development

If further strength follows Thursday’s price action, key short-term levels to watch for signs of resistance include the 10-day moving average and this week’s high of $2.72, followed by the 20-day moving average and a lower swing high at $2.89.

Natural gas has recently formed a potential bullish falling wedge pattern, as outlined in purple on the chart, which reflects compression of volatility in a declining consolidation phase. The expectation is for the pattern to continue to form, with price action likely to remain contained within the two falling boundary lines of the pattern until there is an upside breakout or a downside failure of the pattern.

Downside Risk Scenarios

On the downside, price could continue to fall, while staying above support represented by the trendline, and remain within the wedge boundaries for a while longer. The second bearish scenario involves a decisive decline to a new trend low below $2.56, with natural gas then potentially heading lower towards the next potential support zone, from around $2.30 to $2.21, based on prior price structure from 2024.

Broader Trend Remains Bearish

Since the lower swing high of $3.49, natural gas has declined and established a series of four lower weekly highs, with the current week on track to mark the fifth consecutive week of that bearish pattern. That is a clear pattern on that longer timeframe, and a shift toward demand would be signaled by a decisive breakout above this week’s high, currently $2.72.

If you’d like to know more about how to trade natural gas, please visit our educational area.