Natural Gas Price Forecast: Bullish Momentum Builds as 200-Day MA Reclaimed

Strong support around a trend low of $2.86 for natural gas that was established last week has been followed by a bullish reversal. Support was seen around the anchored volume weighted average price (AVWAP) (light blue) from the closing price of the long-term trend low from February 2024. In addition, the decline to the low of $2.86 showed symmetry on a percentage basis with the previous long-term decline that began following the June 2024 swing high of $3.16. The June 2024 bearish correction ended after a 40.7% decline in the price of natural gas, while the latest correction was 41.7%.

Buyers Take Control

On Monday, natural gas spiked higher, reclaiming the 200-Day MA at $3.08 during the advance and rising to an eight-day high of $3.37, at the time of this writing. It looks to be rapidly heading towards a test of resistance around the 20-Day MA, now at $3.47, or to the middle of a long-term rising trend channel (dashed line). Also, a minor interim upswing at $3.61 can be used as a proxy for the middle line of the channel.

In addition, the 2023 peak was at $3.64 and close enough to be included in a potential resistance zone from $3.61 to $6.64. Since the 20-Day MA is falling, it may represent a slightly lower price by the time it is reached. Nonetheless, the 20-Day line has not been well recognized by the market recently. It can still provide clues regarding the strength of demand but doesn’t deserve the same attention as when it has previously represented trend support more clearly.

Reclaimed 200-Day Moving Average

Signs of improving bullish momentum can be seen in the relative strength index (RSI) momentum oscillator as a fourth touch of the trendline was made today. A clear breakout above that line will provide further evidence for improving bullish momentum. It is also interesting to see the relationship with the 200-Day MA. The 200-day line failed as support a week ago and natural gas traded under the 200-Day line for most of the week. Since the low of Monday was $3.05, a successful test of support around the 200-Day MA, now at $3.08, was completed and it was followed by clear bullish momentum.

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