Natural Gas Price Forecast: Testing Key Resistance Near 200-Day Average

Short-Term Strength Meets Resistance at 200-Day Average

Natural gas successfully tested resistance near the 200-day average on Thursday, reaching a high for the day of $3.57. Although a second day of higher daily highs and higher lows was established, reflecting short-term strength, sellers remain in charge below the 200-day average, now at $3.59. A sustained recovery above that average, followed by this week’s high of $3.74, is needed for signs of a bullish reversal. Given the proximity to the bottom of a large rising trend channel, that is the anticipated direction, other than possible dips to further test support near the trendline.

Weekly Range Defines Near-Term Price Levels

This week’s range from $3.16 to $3.74 defines near-term support and resistance, respectively. If a drop through the bottom triggers, support is anticipated the uptrend line. Further selling would put the January higher swing low at risk of failure. However, a relatively quick recovery of the weekly low maintains the current support zone.

Volatility and Channel Structure Frame Upside Targets

Recent sharp swings occurred on the upside and downside natural gas, and a similar high volatility environment could return following a sustained breakout above this week’s high, once the week ends. Both the recent higher swing low and higher swing high (multi-year high) recognized the boundary of the channel. This means it may do so again. Higher targets start with the 38.2% Fibonacci retracement at $4.79. That area is given added credibility as it lies near to the rising middle channel line (dashed), which represents a potential pivot zone.

Key Support Levels Reinforce Long-Term Trend Structure

On the downside, a drop through the low of the week that quickly recovers and stays above the low of $3.16, is near-term support. That level begins a range down to the higher swing low of $3.01 from last month. The higher swing low is an important support area as it defines trend structure, along with a long-term rising trendline. That line is also the bottom of a trend channel, giving it added weight as potential support. The formation was confirmed again recently by the January peak of $7.44, as resistance was seen near the top parallel line. Once a reversal from once side of the pattern triggers, the top of the formation becomes a potential target. And the middle of the pattern a more likely target.