Natural gas prices test key resistance at $3.12 amid bullish recovery

Natural gas prices have maintained support at the 20-day moving average, bolstering its recent recovery. The commodity hit a four-day high of $3.075 on Monday and is on track to close at a five-day high. A higher daily low of $2.997 confirmed this support, following a minor retracement of just over one-third of Friday’s bullish outside day. However, it remains unclear whether the bullish momentum will be confirmed by a daily close above Friday’s high of $3.051.

The key dynamic support at the 20-day moving average suggests upward pressure may continue. The next upside target is the 200-day moving average near $3.12, with last Tuesday’s lower daily high of $3.156 also serving as an initial target. The upper boundary of a rising trend channel is another critical level to watch, as resistance here could determine whether the market breaks out or declines.

Despite the potential for further gains, the prior surge raises concerns about exhaustion. Natural gas advanced by approximately 17.5% in just three days, leading to a trend exhaustion and a 78.6% Fibonacci retracement of the prior advance on Friday. Although the daily relative strength index (RSI) did not reach overbought levels during the advance, the correction quickly returned natural gas to the original channel structure.

For the recovery to regain stronger upside momentum, natural gas would need to sustain a move back above the 200-day moving average. The outlook will improve if this resistance can be reclaimed and the price begins to hold above it. The reaction to the 200-day moving average will determine whether the current support can translate into a broader advance.