Natural Gas Price Rejection at $2.99 Puts $2.81 Support in Focus

Sellers Fade $2.99 on October Roll

Natural gas ran into $2.99 resistance on Thursday as the front-month rolled to October, then faded as sellers took back the session. Once that high was tagged, prices were driven into the lower half of the day’s range. At the time of writing, a higher swing low of $2.89 was established, defining short-term support.

Both the 100-day and 50-day moving averages were reclaimed during Thursday’s advance, a sign of strength. Those bullish signals may not confirm, however, as natural gas looks set to close near resistance represented by those indicators. Notably, the two averages are clustering in the same area, with the 50-day moving average at $2.92 converging toward the 100-day at $2.91. That overlap increases the significance of the zone as a key pivot. So far, price behavior is showing resistance.

Shooting Star Flags $2.81 Next

The result is a bearish shooting star candlestick pattern that is set to complete, with a bearish signal indicated below $2.89. That could lead to a test of support near the prior lower swing high of $2.81, a key level near the upper boundary of the recent consolidation at the bottom of the declining trend. A pullback following an initial bullish reversal signal to test support levels is normal price behavior and should provide new information about demand.

Inverse Shoulders Still Incomplete

This week’s upside breakout from a potential bottom consolidation still suggests that at least another leg up should follow a successful test of support. The bottoming pattern took the form of a small inverse head-and-shoulders pattern. The neckline is not well defined, however, so the $2.81 potential support level needs to be treated as an area rather than a single point. This is always the case but more so here. Internal to the bottoming pattern is the 20-day moving average, suggesting support around $2.76.

$3.33 Waits on a $2.99 Reclaim

On the upside, natural gas would need to reclaim the 50-day moving average and then the recent interim swing high at $2.99 before there are signs that it could continue to strengthen. An upper target zone if buyers can push prices higher is the 200-day moving average, currently at $3.33 and falling. Until $2.99 is recaptured, that higher objective stays secondary to how demand responds at $2.89 and $2.81 after Thursday’s rejection at the same $2.99 high that opened the session’s test.

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