Natural Gas Price Forecast: Bullish Momentum Improves Following Retest of Key Support Levels

Natural gas retested trend support on Friday at the 20-Day MA with the day’s low of 3.81. Support was seen from the low and it was followed by an intraday rally that is set to close strong, near the highs of the day. A bullish one-bar bullish momentum hammer candlestick pattern looks likely to be completed today. That would provide a near-term setup heading into next week as a rally above the high would show continued strength.

At the time of this writing natural gas continues to trade near the highs of the day and has reached a high of 3.98 so far. If the day ends with a bullish hammer, then a breakout above today’s high will indicate strength that could result in a rally above yesterday’s high, which is also an interim lower swing high, at 4.05.

Short-term Series of Lower Swing Highs

Yesterday’s high was the second lower swing high that has occurred since a bearish reversal followed the 4.37 trend high from last week. The day ended down and today’s drop below yesterday’s low of 3.86 earlier in the trading session marked it has a swing high.

There is a possibility that the lower swing high is retained and the developing small downtrend (countertrend decline) of lower swing highs may be setting the stage for a deeper correction. However, today’s bullish price action following a successful test of support at the 20-Day line and possibility of a strong close, leaves open the prospect of a continuation of Wednesday’s bounce off support at the 20-Day MA

Bullish Above 4.05

On the upside, a breakout above the 4.05 swing high will trigger a continuation of the bull advance from Wednesday’s low of 3.71. That low was also a higher swing low and now part of the price structure of the uptrend, which is also near support represented by the uptrend line.

The 61.8% Fibonacci retracement, where resistance might be seen, is at 4.09 and it is followed by the 78.6% retracement at 4.20. Moreover, there are two additional potential resistance areas. There is also a monthly high at 4.20, which provides confirmation for that price level as it matches the Fibonacci level.

Bearish Below 3.71

Outlook turns bearish if there is a drop below this week’s low at 3.71 as it is key trend support of a higher swing low. However, there is an identified potential support zone from around 3.70 and 3.64, which could either hold and lead to a bullish reversal, or natural gas breaks down through the zone and heads lower towards 3.53 or so.

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