Natural Gas Price Forecast: Tests Resistance, Buyers Eye Trend Reversal

Natural gas rallied to a high of $3.46 on Tuesday before backing off. The high for the day was a successful test of resistance at the 20-Day MA, which is now at $4.43. Trading continues in the lower third of the day’s trading range at the time of this writing. If the day ends with natural gas in a similar position relative to the day’s range, it will establish a potentially bearish shooting star candlestick pattern. A breakdown would be triggered by a drop below today’s low, currently at $3.31

Likely Bottom Established

Nonetheless, there are indications that the recent swing low of $2.86 may have completed a bottom for natural gas. This would mean that a drop below today’s low may eventually generate a higher swing low and the first pullback following Monday’s bullish reversal on a weekly time frame. The 200-Day MA was also reclaimed yesterday with a breakout confirmed by a daily close above the 200-Day line.

Support Confluence

Support for the bottom of the bearish correction was found at the AVWAP level started from the 2024 trend bottom. This gives it extra validity given the reaction since support was at an AVWAP level for the full uptrend. In addition, there was symmetry in the recent correction on a percentage basis. The price of natural gas fell by as much as 41.5% from the recent trend high of $4.90, while the prior large correction from June 2024 saw a price decline of 40.7%. Nonetheless, the current advance is a counter-trend rally within a larger bearish downtrend price structure.

Daily Close Above 20-Day MA will Confirm Strength

A daily close above the 20-Day MA would be a confirmation of strength that could lead to higher prices. That would be needed before there is an indication that buyers are returning, and that bullish sentiment may be sustained. Key potential support during weakness is around the 200-Day MA, now at $3.09, while this week’s low is at $3.05. Once this week ends, that low will be critical to the developing weekly trend of higher weekly highs and higher weekly lows.

On a monthly basis, natural gas looks likely to end the month above the lows of December through February, which were breached during the recent decline, thereby providing one more piece of evidence that buyers are starting to take back control.

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