Natural Gas Price Forecast: Support Holds Near Trend Channel

Third-Day Support at Trend Channel Base

Natural gas showed signs of support for the third day with a slightly lower retracement low of $3.06. A slightly lower high of $3.20 was established, as well. It looks likely that natural gas will close at its highest daily close in three days. That would be a minor sign of support and right where expected, near a long-term uptrend line that is also the bottom boundary of a large rising trend channel. Recognition of the trend channel is useful as natural gas has reacted to price zones within the formation previously. Therefore, it might do so again.

Decision Area Tests Lower Boundary

It is in a decision area now, relative to the channel pivot zones. Natural gas has been testing support at the lower channel boundary all week. Bearish momentum has subsided as the price has been consolidating. Downward pressure remains though, as illustrated today. A new trend low and lower daily high show downward pressure on prices. Despite the potential for support to hold at the lower channel boundary, the higher swing low at $3.01 from January has greater significance, as it is part of trend structure and confirmed a third point for the trendline.

Narrow-Range Week May Signal Minor Demand

With a couple more days remaining in the week, natural gas is on track to end with a relatively narrow-range week at key support. A weekly close above the middle of the range, currently at $3.21, would show a minor sign of improving demand. After that, a decisive upside weekly breakout is needed. Currently, the high for the week is at $3.27.

Downward Pressure Persists Until $3.66 Swing High

Nevertheless, downward pressure in the price of natural gas may persist until there is a sustained advance above the lower swing high at $3.66 from February 6. The swing high is joined by the 200-day average at $3.60. Note that the lower swing high recently confirmed the 200-day line as resistance, after it had previously represented potential support.

Fibonacci Targets Between $4.59–$5.50

Upside targets for natural gas start with a range from $4.59-$4.73, derived from prior resistance and a 38.2% Fibonacci retracement of the downswing, respectively. Further up is a range from $5.25 to $5.50. That range begins with a 50% retracement level and ends with the high from November.

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