Natural Gas Price Forecast: Faces Key Support Test Amid Rising Trend

Natural gas held a low of 3.72 on Tuesday as it further tested support around the 20-Day MA. The 20-Day line is currently at 3.78, while the high for the period is 3.91. This puts natural gas in a precarious position as it again tests trend support areas. The near-term uptrend has trend support at the purple 20-Day MA, along with an uptrend line. However, there is a confluence of potential price support levels marked from 3.70 to 3.64. That zone can be included with trend support analysis as it is very close to today’s low and the trendline.

Strengthening Above 3.91

On the upside, a bullish reversal would be indicated on a rally above today’s high of 3.91. Natural gas would then be heading up into a potential resistance zone defined by the prior six days of price history. The bull trend does not continue until there is a rally above the recent trend high of 4.37. In the meantime, natural gas needs to contend with a possible deeper pullback as trend support is being threatened.

Bullish Medium-Term

The medium-term outlook for natural gas remains bullish given the breakout of a large symmetrical pattern in the second half of November. That breakout was accompanied by a bullish trend continuation signal and followed by a trend reversal signal on the advance above the lower swing high of 3.64 on December 20. These are all bullish signals for the medium-term.

In the short term, natural gas could still correct further as a normal component of a bullish trend continuation pattern of an advance followed by profit taking and a pullback. However, until the lower end of the support zone noted above at 3.64 is broken to the downside, the possibility of a continuation higher remains.

Deeper Correction Remains Possible

A continuation of the bearish correction on a decisive drop below 3.64 will put natural gas in a position to test support around a price zone from 3.52 to 3.51. That zone consists of the 127.2% extended target for a small falling ABCD pattern and the 61.8% Fibonacci retracement level, respectively. Moreover, last week’s high of 4.33 generated a lower swing low and possible second top of a double top pattern.

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