Natural Gas Price Forecast: Rebounds from Support Zone

Natural gas reached a new trend high of $4.48 last week, which led to a bearish retracement to the 38.2% Fibonacci retracement on Monday with the day’s low of $3.91. Subsequently, support around that low continued to hold on Tuesday with natural gas triggering a one-day bullish signal on a rally above Monday’s high at $4.09. At the time of this writing, it continues to trade near the highs of the day, which was $4.12. That put it into a gap from Monday. The gap indicates a potential short-term upside target of $4.15, the low from last Friday.

Strength Follows 38.2% Retracement

If the $3.91 low price completes the retracement, it will put natural gas in a bullish position to challenge and possibly exceed the recent trend high at $4.48. Recent signs of strength include reaching a new trend high and the 20-Day MA crossing above the 50-Day MA recently. A bullish recovery following a minimum 38.2% retracement is a sign of strength relative to a deeper 50% or 61.8% Fibonacci retracement. Also note the nearby rising internal trendline as it will combine with the 38.2% retracement zone tomorrow. Therefore, a decline below Monday’s low of $3.91 will also trigger a breakdown of the rising line. If that happens then lower price levels will become targets.

Lower Support Zones

Although the 50% retracement is at $3.73, it begins a potential support zone that goes down to the 61.8% Fibonacci retracement level at $3.56. Within that potential support zone is the 50-Day MA at $3.63 and the 20-Day line at $3.60. Also, the peak from 2023 is at $3.64. That peak had significance as a bull breakout above it on December 20 provided another bullish reversal signal for the long-term downtrend.

Contained within Rising Trend Channel

Notice that resistance was seen around the top rising parallel trend channel line in December and January. That channel line along with the short internal uptrend line come together around a 50% retracement level at $4.56. If natural gas can continue to strengthen it could hit a new trend high yet stay below resistance marked by the top trendline. Nonetheless, before exceeding the 50% retracement will have either broken below the uptrend line or above the top channel line.

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