Natural Gas Price Forecast: Weakens as Key Support Zone Faces Renewed Pressure

Natural gas slid to a new retracement low of $2.88 on Monday before rebounding to an intraday high of $3.00. This move triggered a drop below the prior retracement low of $2.90 and put natural gas very near the key swing low of $2.86 from April. That April low sparked a bullish reversal after a successful test of the anchored volume weighted average price (AVWAP) line drawn from the 2024 low. It shows the potential of the AVWAP line to represent dynamic support.

Support Test Intensifies

For the past two weeks, the AVWAP has been tested repeatedly as a potential support zone. Today, however, that line—currently near $2.96—was broken again, and natural gas looks set to close below it for only the second time since it was reclaimed in September last year. This signals persistent downward pressure and raises the risk of a breakthrough the $2.86 support level. Such a move would represent a meaningful shift in sentiment, as buyers have consistently stepped in at or near this zone for several months.

Bearish Continuation Targets

A sustained move below $2.86 would confirm a bearish continuation, initially targeting a 78.6% retracement level at $2.79. In addition, a falling ABCD pattern projects a 100% downside target to $2.63. A broader Fibonacci measurement identifies another 78.6% retracement level at $2.54, representing a more extended bearish scenario. These levels provide traders with clear downside reference points should the current weakness accelerate.

Levels to Watch for Strength

Near-term strength would first be signaled by a rally above today’s high of $3.00, though such a move would not confirm a sustainable reversal. A more meaningful bullish shift requires a breakout above $3.15, while a clearer trend change would occur only with a sustained move above the lower swing high at $3.19. If that level is reclaimed, the 200-Day moving average, now at $3.80, becomes a potential upside target.

Technical Outlook

With prices hovering just above the April swing low, natural gas is at a technical crossroads. The loss of AVWAP support suggests sellers remain in control, but the proximity to a long-tested support zone means the market could continue to hold the support zone until demand improves and triggers a bullish reversal.

Although a drop below $2.86 would likely accelerate downside momentum toward deeper Fibonacci targets, if those lower targets are reached, the odds then begin to favour a rebound of some degree. Currently, a recovery of $3.19 would begin to tilt the outlook in favor of the bulls. Until then, market sentiment appears to favor continued caution.

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