Natural Gas Price Forecast: Bull Reversal Off Support and Strong Performance

Natural gas held trend support around the 20-Day MA on Wednesday with a new pullback low of 3.71 before the buyers took back control. The subsequent intraday rally led to a high of 3.99, at the time of this writing. A one-day bullish reversal and outside day was triggered on a rally above Tuesday’s high of 3.91. Trading continues near the highs of the day and natural gas will likely end strong and positive, in the top third of the day’s trading range.

Also, a daily close above will confirm the one-day reversal. This will leave natural gas in a bullish position to rise further to test resistance levels within a consolidation range that has formed over the past few weeks. Today’s low successfully tested support just above an identified support zone from 3.70 to 3.64.

Bouncing into Resistance Zone

It is notable that last week’s trend high of 4.37 ended with a bearish candlestick pattern and a closing price below the previous trend high of 4.20. This means that if today’s advance continues, and it looks like it will, there is a good size resistance zone to be encountered before a chance at new trend highs.

If correct, the expectation would be for a period of consolidation largely contained with support around the uptrend line and key resistance at the most recent swing high of 4.33. There are a couple of prior weekly price levels that may see resistance. They include 4.02, 4.06, and 4.41. Also, there is a monthly high at 4.20.

Drop Below 3.64 is Bearish

Nonetheless, a decisive decline below the 3.64 price level increases the risk for a deeper correction. In that case, a drop to a price zone from 3.52 to 3.51 looks likely. That zone includes the 127.2% extended target for a descending ABCD pattern and the 61.8% Fibonacci retracement, respectively. A little lower is the 50-Day MA at 3.43. The 50-Day line is joined by the 3.39 prior peak from January 2024. If the 20-Day line fails to mark support, the 50-Day line becomes a target when considering moving average analysis.

Watch End of Month Relative Closing

On a monthly basis (not shown), natural gas has been progressing in a series of higher monthly highs and higher monthly lows for five months. The closing price for the month may provide a clue to the strength of weakness of demand. Currently, the trading range for the month of January is 3.33 to 4.37, which puts the middle at 3.85.

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