Natural Gas Price Forecast: Bullish Reversal May Lead to Rising Prices

Today’s price action shows a bullish reversal day for natural gas. Natural gas rallied to a three-day high of 2.13 on Tuesday following another test of recent support levels earlier in the session. Support was seen off the day’s low of 1.991. That was a slight decline below the prior retracement low of 1.994.

Earlier in today’s trading session the sellers were in charge, which led to a new trend low. But then the buyers took back control, reflecting strong demand, and took the price of natural gas to a three-day high of 2.13, at the time of this writing.

Bullish Daily Reversal Following New Trend Low

A bullish reversal of a false breakdown is now in process. It is a sign of improving demand and indicates that the price of natural gas may continue to test higher prices. Notice that recent lows were tested as support over the past three days and each time support was retained. Nevertheless, further signs of strengthening will be needed to further confirm improving demand. A daily close at a three-day high, above Monday’s high of 2.10, will provide the next sign of strengthening.

20-Day Moving Average May See Resistance

If natural gas does proceed higher, it will first be heading up into potential resistance around the 20-Day MA, currently at 2.21. The internal downtrend line can also provide a guide. A little higher is a weekly high and the most recent daily swing high at 2.27. Natural gas will need to get above that high before there is greater confidence that it may continue to rise.

I rise above 2.27 will trigger a bullish weekly reversal and take out the lower swing high on the daily chart, a clear indication that the downtrend correction is reversing to a bullish rally. The level of momentum of the rally is an open question. Until there is a bullish breakout above the 2.21 high the downtrend is dominant.

Natural gas could consolidate, and trade range bound around the bottom of the trend yet retain support at the current lows and the 2.21 resistance. To help avoid that scenario, the 2.21 is being highlighted. Once this week is over, this week’s high can possibly be used as a bullish signal.

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