Gas prices will make another attempt to consolidate above $3

US natural gas prices broke out of a descending channel in early fall. However, they are still struggling to shift to sustained growth. So far, all their attempts to consolidate above $3 have been unsuccessful. In recent years, this level has served as both important support and strong resistance. The 50-day exponential moving average (EMA50) is currently acting as an additional barrier, preventing prices from surpassing the $3 mark. But if this level is breached, the path to the 38.2% Fibonacci retracement ($3.22) will be opened.

Gas buyers managed to make some gains on Tuesday and Wednesday. The price surged 3.3% from a local low, while the Stochastic lines crossed over, pointing to a probable continuation of the upward move. The bulls’ nearest targets are the level of $3 and the EMA50, followed by the EMA100. The $3.22 threshold coincides with the EMA200, increasing the chance of a correction if reached. Taking at least part of the profits in the $3–$3.2 range would be optimal.

According to the weather forecast for late September and early October, warming temperatures are expected across much of the United States. This could increase natural gas demand for air conditioning. The cost of fuel may also be supported by lower production volumes: after a record set in August, daily output decreased from 108.3 to 107.3 billion cubic feet. 

Reuters analysts highlight a potential divergence between domestic gas quotes and the international market. US LNG export plants are currently boosting production, putting pressure on prices in Europe and Asia in the coming years. However, this will also reduce the availability of gas within the United States, especially given rising energy consumption from data centers. As a result, average fuel prices within the country may rise by over 15% by the end of this decade.

Keep the following trading strategy in mind:

Buy natural gas at the current price. Take profit 1: $3. Take profit 2: $3.22. Stop loss: $2.65.