Natural Gas Price Forecast: Poised for New Highs or Pullback from Resistance

Natural gas is on track to complete an inside day on Wednesday, following another test of resistance around a top trend channel line earlier in the trading session. The high for the day was $4.52 and the low was $4.23. A breakout through either price level may lead to a continuation in the direction of the breakout.

If an upside breakout triggers, then the trend high from Tuesday at $4.55 may be challenged and a bull trend continuation signal would trigger on a move above that high. In addition to the bullish pattern of a rising trend, natural gas is on track to end the day at its highest daily closing price for the current advance, and the highest price since mid-December 2022.

Above $4.55 Triggers Trend Breakout

If the $4.55 price level is exceeded, then natural gas could reach the next higher target zone around $4.70 to $4.72. Subsequently, the 38.2% Fibonacci retracement of the full decline that began from the 2022 peak of $10.03 is at $4.77. Since that measurement is based on a long-term pattern, it is potentially significant with a good chance that strong resistance might be seen there.

Rising ABCD Pattern Formed

The advance from the late-January swing low of $2.99 is in its second leg up following a clear test of support on Monday at the day’s low of $3.74. That low generated a higher swing low. There is the confluence of several indicators identifying the $3.74 price zone as potentially significant support. Given the sharp advance since that swing low. Including a breakout to a new trend high yesterday, natural gas seems to be indicating it may go higher and possibly break out to a new trend high.

When adding a rising ABCD pattern (purple) to the current advance, it shows a potential initial target at the 78.6% extension of $4.93. Whether it is reached or not, the ABCD pattern shows the potential for higher prices. Possible targets from the ABCD pattern are identified when there is price symmetry between the CD leg of the pattern and the AB leg, or a harmonic relationship between the two swings. The targets identify potential resistance levels.

Drop Below $4.23 May Lead Lower

Alternatively, a decline below today’s low of $4.23 will show short-term weakness that could lead to a lower pullback to test support levels. Tuesday’s low at $4.06 could see support and if it fails, a test of the 20-Day MA at $3.88 currently, becomes possible.

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