Natural Gas Prices Rejected at $2.99: What's Next?

Natural gas prices are in focus as they failed to break through $2.99, putting support at $2.81 under scrutiny.

The daily chart for natural gas futures shows a larger trend structure, with a bearish shooting star candlestick pattern forming. This could lead to a test of support near the prior lower swing high of $2.81, which is also close to the upper boundary of the recent consolidation at the bottom of the declining trend.

A pullback following an initial bullish reversal signal to test support levels is normal price behavior and should provide new information about demand.

The upside breakout from a potential bottom consolidation still suggests that at least another leg up could follow a successful test of support. The bottoming pattern took the form of a small inverse head-and-shoulders pattern, but the neckline is not well defined, so the $2.81 potential support level needs to be treated as an area rather than a single point.

The 20-day moving average suggests support around $2.76 internal to the bottoming pattern.