Chart Analysis Points to Natural Gas Advance, Bulls Gain Momentum

Natural Gas Forecast Video for 26.12.23 by Bruce Powers

Once again natural gas flirted with resistance on Friday around the 20-Day MA, currently at 2.58. Natural gas is on track to end Friday with a relatively narrow range day following an advance to a new trend high of 2.62 earlier in the session. This follows Thursday’s bullish outside day that closed at a new daily high close for the trend after triggering a bullish continuation earlier in the session on an advance above the previous trend high at 2.60. This is bullish behavior that should lead to higher prices once the 20-Day MA is cleared to the upside with a decisive daily close above 2.58. That could happen today as the market has not yet closed.

Weekly Bullish Breakout Confirms Strength

On the weekly time frame, a bullish breakout of a doji hammer bottom candlestick pattern triggered earlier this week on a rally above 2.44. This week natural gas is set to close in a position of strength, near the high of the week’s range. This puts natural gas in a good position to accelerate its rally heading into next week.

38.2% Fibonacci Retracement at 2.77 Marks Next Target

The next upside target is at the 38.2% Fibonacci retracement at 2.77. That level is strengthened by the completion of a rising ABCD pattern that hits its first target at the same price (D). Nevertheless, a subsequent continuation to higher targets is a real possibility given the extent of the most recent correction. It saw the price of natural gas decline by 38.6% in only 32 trading days. That was the largest decline since the February 2023 bottom.

Eventual Test of Support at Bottom of Flag on Horizon

Natural gas broke down from a rising bear flag pattern in late-November. Subsequently, selling got more aggressive leading to a drop to 2.235, which generated a swing low. With the current rally, natural gas is pulling back for a potential test of resistance at the bottom of the flag pattern. A key resistance level has been identified as 2.88. Support or resistance has been seen several times in recent months around that price level and it matches the price represented by the crossing of two trend lines. Further, note that the 50-Day MA is heading for that price area and may hit it by the time price rises to test it as resistance.

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