Natural Gas Price Forecast: Faces Resistance at Key Level After Initial Rally

Natural gas rallied to a high of 2.26 on Monday before encountering resistance that led to an intraday pullback. Whether it becomes more than just a pullback remains to be seen. Since today’s high natural gas has fallen to the lower third of the day’s trading range, putting short-term bullish momentum at risk of failure that could lead to a deeper pullback. It is on track to end the day with a bearish shooting star candlestick pattern. Today’s advance showed strength initially but was unable to recapture the more significant price level at the prior interim swing high of 2.27.

First Wedge Target May See Pullback

That 2.27 price level was resistance on July 22. It also marks the beginning of a bullish descending wedge pattern (orange boundary lines). The beginning of the wedge is typically the minimum target for the pattern. Arguably, that target of 2.27 was reached with today’s high of 2.26. After today’s close a drop below the 2.155 low of the day will trigger a daily bearish reversal. The 20-Day MA is the first obvious target at 2.09.

20-Day MA is Crucial Near-term Support

A near-term bullish outlook would be maintained as long as natural gas stays above the 20-Day line. It had been marking trend resistance since late-June until last Thursday’s bullish breakout. Subsequently, if price is rejected to the upside upon approach, the 20-Day line will be confirmed as having switched to a line of potential support.

That would be bullish behavior that may mark the end of a retracement. However, there is also a potential support zone lower down around 2.03 to 2.02. That range begins with the low from last Thursday and was an area of daily support or resistance at more than several times over the past month.

Weekly Bullish Reversal Points to Higher Prices

If a pullback comes before a rally above the 2.27 interim swing high, it is anticipated to eventually resolve itself to the upside as a bullish reversal may still be in its early stages. In addition to a bullish wedge breakout last week, natural gas also triggered a bullish reversal on the weekly chart. Today’s advance further confirms the breakout. It was the first time in eight weeks that a prior week’s high was exceeded to the upside. This is bullish behavior occurring on the longer time frame chart, which is more significant than the daily and lower periods.

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