Bullish Reversal Signals Strength in Natural Gas Market

Natural Gas Forecast Video for 03.07.23 by Bruce Powers

The bulls got what they were looking for on Friday. A breakout above Thursday’s 2.75 high triggered a bullish reversal off a one-day down pullback from the 2.88 trend high. It now looks like natural gas may have already completed a retracement with a swing low of 2.62 and is working on testing the trend high with the possibility of continuing to the next higher target zone. Anyway, that possibility exists. We continue to watch for further signs of strengthening that would support or negate such an outlook.

Set to Close Strong for the Week

In addition to a bullish reversal following a quick retracement, followed by a breakout day with upward momentum, natural gas is set to close in the top quarter of the week’s range. It will complete this week at its highest weekly closing price in seventeen weeks! Further, if natural gas closes above February’s 2.75 close for June, it will be the highest monthly close in six months, and it will trigger a bullish monthly reversal. The longer the time frame, the more significant a break of a price level.

Underlying Strength in Natural Gas

During the recent rally natural gas hit resistance at 2.88. That was a little above the previously identified resistance zone that ended with a high of 2.83. Natural gas exceeding the price range is the first sign of strength beyond normal indications. Today’s bullish action again adds a piece of evidence pointing to underlying strength in natural gas.

Shallow Pullback Points to Strength

Generally, in Fibonacci ratio analysis a minimum retracement of 38.2% is anticipated. However, when support and a bullish reversal is seen higher than that first Fibonacci retracement zone, it is a bullish sign and buyers are not waiting till the pullback level is reached. They are more aggressive and buying in anticipation of natural gas finding support rather than waiting till the price level is reached. This reflects growing demand. Next, we want to see upward momentum continue up to at least a daily close above 2.88, the recent peak. Once that happens, natural gas targets the next higher price zone (red highlight) from around 2.97 to 3.03.

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