Natural Gas Market Analysis: Is a Bearish Reversal Ahead or Just a Retracement?

Natural gas prices have seen a strong bullish rally since 24 August 2025, but recent technical signals suggest that momentum may be slowing. With the Relative Strength Index (RSI) entering overbought territory and the MACD line crossing beneath the signal line, many traders are now asking the key question: is natural gas preparing for a bearish reversal, or will bullish momentum continue into Q4?

Technical Analysis: Retracement or Full Reversal?

At first glance, technical indicators appear to suggest a potential reversal in natural gas. However, a closer look at the past three months reveals that similar signals have occurred during previous minor pullbacks—particularly on 8 and 21 October—yet the bullish trend remained intact.

During this period, natural gas prices have risen from $38.90 to $46.46, marking an impressive 19.43% increase. This pattern of brief retracements within a broader uptrend may indicate that the current dip is temporary rather than the beginning of a larger bearish move.

Bollinger Bands and Fibonacci Support

A recent price bounce from the upper Bollinger Band further supports the likelihood of a standard retracement. Prices have tested a key Fibonacci support level at $45.80, followed by the formation of a bullish candle—mirroring previous retracement behaviour seen in this market.

Although the MACD is showing bearish momentum, traders should remember that it is a lagging indicator, and signals should be interpreted with caution during strong trending markets.

Fundamental Drivers: Weather and Demand

Recent natural gas strength can be largely attributed to colder weather conditions, which have increased demand for heating. As we move deeper into Q4 2025, colder temperatures may continue to bolster natural gas consumption, potentially supporting further upside.

However, traders should also remain aware of potential downside risks. Milder-than-expected weather patterns or high inventory levels could reduce demand and cap price growth, limiting bullish potential in the short term.

Outlook for Traders and Investors

With the possibility of a short-term retracement, investors should closely monitor key price zones identified through Fibonacci levels, along with RSI and MACD movements, to identify whether the market experiences a deeper bearish correction or resumes its upward trend.

For longer-term investors, Q4 2025 and Q1 2026 may present attractive opportunities. If cold weather persists and demand for heating increases, natural gas prices could continue to climb, offering favourable returns for those positioned early.