Natural Gas Price Forecast: Tests Resistance – Will the Rally Continue?

Natural gas reached a new near-term trend high of $3.80 on Friday before pulling back slightly. That high put it closer to the next identified resistance zone that looks to be around $3.83. That price level includes the completion of the 61.8% Fibonacci retracement, and it is also a weekly high from two weeks ago. It looks likely that this week will end with natural gas in a relatively strong position, in the top third of the week’s trading range.

Whether bullish momentum can be sustained into the next week, leading to a breakout above $3.80, remains to be seen. Alternatively, a pullback and consolidation within the weekly range from two weeks ago could also play out.

Further Weakness Likely Below $3.64

Further weakness towards lower potential support levels may follow a drop below today’s low of $3.64. Potential support around the 20-Day and 50-Day MA, currently from $3.53 to $3.56 will likely be tested. Notice that the 20-Day line crossed below the 50-Day line today. That relationship should continue to provide clues going forward. Natural gas completed a $1.38 or 31.6% bearish correction at the $2.99 low two weeks ago. Given the subsequent $0.81 or 27% advance, as of today’s high, it wouldn’t be surprising to see a rest before it may be ready to proceed higher.

Lower Support

Other price levels to watch for support include the prior interim swing high at $3.39 from early January and this week’s low at $3.35. The $3.39 price level is confirmed by the 50% retracement of the recent advance, which is $3.40. Further down is the 61.8% Fibonacci retracement at $3.03. The $3.30 price level is also the two-week low. Notice that in both cases, there are two indicators pointing to the same of similar price area.

Long-term Bull Trend Remains Intact

In the bigger picture, long-term bullish signals triggered the last quarter of 2024. There was the breakout of a large symmetrical triangle pattern and a bullish reversal of the long-term downtrend. The expectation is for the bull trend starting from the low of $1.52 to eventually continue once the correction is complete.

Notice that the recent swing low that followed the $4.37, an almost two-year high, successfully found support around the initial bull breakout area of $3.02. The subsequent bullish reaction indicates the low was likely significant and it established a higher swing high for the price structure of the uptrend.

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