Bullish Reversal Possible but Not Confirmed

Given the long-term nature of the 200-day line there is the potential for a completion of the bearish correction and a bullish reversal from the area around the average. Recent volatility however could result in a short-term failure of the 200-day average and a dip to the 78.6% Fibonacci retracement at $3.45. If that was followed quickly by a reclaim of the 200-day line, the potential for further upside rises.

Aggressive Selling Signals Second Leg Risk

Bearish momentum spiked following the December $5.50 peak, which was a three-year high. The drop quickly put natural gas below the 20-day average and then the 50-day average. Resistance near the 20-day line was confirmed a week ago Wednesday during the first pullback following a breakdown of the 20-day average. On Tuesday a pullback found resistance a bit below the 50-day average. That led to Friday’s new trend low.

Harmonic Targets Define Deeper Downside

This behavior shows aggressive selling that may still be early in a second leg down from the top. If this pattern plays out like it might, the 78.6% retracement is also at risk of failure. A lower target at $3.26 would then be likely. That’s where the second leg down (CD) is 78.6% of the decline seen in the first leg down (AB). There is the potential for support to be seen near that harmonic relationship between the two downswings.

Short-Term Bounce Faces Falling Resistance

In the short-term and before further testing of support near the 200-day line, a breakout above today’s high of $3.70 shows strength but within the larger bearish structure. Key resistance to consider would then be around the 10-day average, now at $4.03 and falling. Wednesday’s high at $3.98 is nearby and can be used to assistant in gauging potential short-term resistance.

Quarterly Structure Supports Long-Term Recovery

The bigger picture quarterly chart suggests the potential for an eventual strong bullish recovery once the current correction is complete. In the Q4 2025 natural gas closed at $3.71 – above the prior quarter high of $3.63. That confirmed a bullish breakout of a quarterly bull hammer candlestick pattern and the completion of the first quarterly pullback for the rally begun from the 2024 low.

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