Natural Gas Breakout Indicates Potential for Further Upside

Natural Gas Forecast Video for 01.05.23 by Bruce Powers

Natural gas breaks out above prior trend highs to trigger a bull trend continuation of the small developing uptrend. That uptrend is coming off the trend low of 1.95 from two weeks ago. A failed breakout occurred earlier this week. Today’s breakout, however, looks like it may indicate stronger bullish momentum as natural gas is on track to close above the most recent swing high around 2.39, the higher daily close in 29 trading days. This it could not do on the breakout attempt earlier in the week. It is a sign of strength that could be a precursor to further upside moves in natural gas.

A daily close above the high earlier in the week at 2.41, would provide another small piece of evidence for underlying strength in natural gas. At the time of this writing, it is close to achieving this but not confirmed until the day is ended.

First Target Completion of ABCD Pattern

The next primary target zone is from around 2.58 to 2.62. At that point the ABCD pattern on the chart will reach its initial target, and a 61.8% Fibonacci retracement completes at the top of that range. Certainly, natural gas can keep going from there with higher targets noted on the chart. The most significant being the completion of a measured move at 3.00.

What to Watch For Next

Another bullish sign for natural gas would be a weekly close in either the top 25% of the week’s range or top 50%. So far it looks to close above 50% of the range. A stronger close would be seen in the top 25% of the week’s range.

This week’s low of 2.17 is near-term key support. A drop below that low disturbs the integrity of the uptrend price structure and points to more uncertainty as natural gas tries to figure out what it does next.

Is Further Consolidation Possible?

Finally, the expanding triangle consolidation at the bottom of the trend could continue to evolve within ranging within the pattern. Yet, you can see that natural gas attempted to break up and out of the pattern today as it spiked above the upper border trendline of the pattern. Such a bullish breakout is not confirmed however until there is a daily close above the top line.

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