Natural Gas Price Forecast: Rally Stalls at New Trend High, Retracement Levels Eyed

Natural gas reached a new trend high of $4.48 on Thursday thereby testing potential resistance around a top trend channel line. The prior trend high was $4.37. Subsequently, resistance was seen from that high leading to an intraday pullback. Notice that there is also an earlier internal rising trendline that converges around the top trend channel line and is another indication that a key resistance level may have been met.

At the time of this writing natural gas is on track to end the day down and it may close in the lower half of the day’s trading range if not the lower third. The new trend high completed a $1.49 or 49.7% advance from the $2.99 swing low from late January.

50% Retracement of Small Upswing

Today’s bearish pullback following the $4.48 high has almost completed a 50% retracement of an internal upswing. The 50% level is at $4.02 and the low for the day so far was $4.03. Nonetheless, that is a price level measuring a shorter internal upswing while the first retracement level from the full advance is at $3.91. That price level is the convergence of both the 38.2% Fibonacci retracement of the full advance and the 61.8% retracement of the internal upswing. Therefore, baring a breakout to new highs before a pullback, that price level is the first lower target.

Lower Price Levels

Subsequently, the next lower confluence potential support zone is identified from $3.75 to $3.73. It consists of a 78.6% retracement level and a 50% retracement level, respectively. Nonetheless, both the 20-Day MA and 50-Day MAs were recently reclaimed during the recent rise. There has not yet been a test of support around those moving averages other than on one-day.

Therefore, if a deeper pullback occurs, they would be obvious potential targets. Keep in mind that the price levels represented are dynamic. Currently, the 50-Day line is at $3.62 and the 20-Day is at $2.57. Moreover, there is also a minor swing low (begins the internal upswing Fibonacci measurement) and 61.8% Fibonacci retracement at $3.56 and $3.55, respectively.

Bull Continuation Above $4.48

Since the top channel line was successfully tested as resistance today, it may also mark a point of potential resistance in the future. Nonetheless, a decisive breakout above today’s high has natural gas heading towards, $4.56, $4.70/$4.72, followed by a 38.2% Fibonacci retracement for the full downtrend that began from the 2022 high at $10.03.

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