Natural Gas Price Forecast: Bullish Weekly Reversal Points to Higher Prices

Natural gas triggered a bullish reversal on Monday in both the daily and weekly time frames, as it advanced above Friday’s high and then exceeded last week’s high of 1.83. It continues to trade near the highs of the day at the time of this writing and is well positioned to close strong, in the upper quarter of the day’s range. In addition, natural gas has a chance to end Monday’s session above last week’s high, which would further confirm strength. It is on track to close above both the 20-Day MA (purple) and long-term downtrend line. Each metric shows improving strength in demand. Natural gas has not been able to close above the downtrend line since January 26.

Second Bottom is Set for Potential Double Bottom

Today’s advance confirms the completion of a minor pullback and further confirms the higher swing low bottom from four days ago at 1.59 (C). A higher swing low is a sign of strength and is bullish. It begins the second leg up of a rising ABCD pattern. The initial target from the pattern completes where there is symmetry between the two swings, at 2.01. The secondary target, where the CD leg of the advance is extended by 127.2% of the AB leg, is at 2.21.

Eyeing Recapture of Downtrend Line

Once a daily close occurs above last week’s high, and above the downtrend line, the chance for a continuation higher improves. The next key encounter will be with the 50-Day MA (orange) at 1.90, as it represents dynamic resistance for the recent part of the downtrend. Natural gas has been trading below it since January 18. A daily close above the 50-Day line will show further signs of strengthening and again improves the possibility of the developing uptrend continuing to higher prices.

Higher Swing Low is Sign of Demand Improvement

The completion of the higher swing low at point (C) increases the chance for an eventual breakout of a double bottom pattern as the setup exists. However, as with all patterns, they need a trigger to confirm a breakout. That will happen on the double bottom pattern on a rise above the most recent swing high at 2.01. Subsequently, a daily close above that high will confirm the double bottom. It will also put natural gas in a position of having a higher swing high to follow the recent higher swing low.

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