Natural Gas Forecast: Pause at Trend Highs Signals Potential for Continued Strength

Natural Gas Forecast Video for 28.06.23 by Bruce Powers

Following a new trend high of 2.82, natural gas trades inside day reflecting indecision as to the next move. It has reached a target zone that goes up to a high of 2.83, based on the confluence of several indicators all pointing to a potential resistance zone from 2.79 to 2.83. However, today’s price action shows that strength continues to dominate as natural gas has only paused its ascent and has not moved into a retracement of note. This opens the possibility for a continuation higher prior to a retracement.

Strength Confirms on Daily Close Above 2.83

A daily close above 2.83 will confirm strength that has a chance to take natural gas higher. It would then be above the 100-Day EMA long-term trend indicator, currently at 2.78. Recently it has been flirting with the 100-Day line, but it has not closed above it decisively. The next higher resistance zone is then around 2.97 to 3.03, with the top level being the peak from the 54% rally begun in February (1).

Retracement Possible

A retracement is likely in the works if natural gas falls below the two-day low of 2.72, and it is confirmed on a daily close below that level. The obvious support zone is then around the internal uptrend line, at approximately 2.64. As long as the uptrend line is successfully tested as support and it holds, natural gas can keep rising following a pullback.

You can see on the chart how support of the uptrend line would be reached prior to a minimum 38.2% Fibonacci retracement. The 14-Day relative strength index momentum oscillator is up to a level where the prior rally hit resistance. A similar situation could unfold again with the current advancement, although the oscillator has not technically reached overbought (above 70 reading).

Bigger Picture

Natural gas has been bottoming for approximately four months and is slowly showing signs of reversing off the bottom. This week’s price action shows further signs of strengthening. As the month comes to a close the monthly closing price will be telling as to what comes next. A strong closing should lead to higher prices eventually.

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