Natural Gas Price Forecast: Eyes Sustained Breakout as Bullish Momentum Builds

Natural gas attempted a bullish breakout on Tuesday as it rallied above the prior swing high of 3.02. Resistance was seen shortly thereafter at a high of 3.06. To confirm the breakout a daily close above 3.02 is needed and it is not clear yet whether that will happen.

Nonetheless, it looks like natural gas will close strong relative to the bigger picture. It looks to be on track to end the day at its highest daily closing price since June 12, which ended at 3.03. And there was only one day that ended higher going back to January 12. Each of those two days is at or near a prior peak that makes up a series of lower swing highs.

Will Breakout Confirm?

The advance today triggered a breakout of the closest prior swing high in the series of lower swing lows at 3.02. Once there is a daily close above 3.02, assuming further bullish moves, an upside breakout of a large symmetrical triangle pattern will have confirmed the breakout. In addition, today’s rally triggered a likely continuation of the bull trend that started from the August swing low, as there is now a higher swing high. A daily close above the 3.02 high also will confirm the continuation of that trend. A confirmed breakout indicates that there is a greater chance for a continuation of the move.

Upside Looks Towards 3.35

Once the price structure of the triangle is busted with a higher swing high, previous higher swing highs become a target. And a confirmed breakout above either will provide another sign of strength. The first is 3.16 from the peak in June. Given the potential improvement in momentum once a breakout is confirmed that price target may easily be surpassed leading to 3.22.

However, that is a short-term target as it is derived from the most recent rising ABCD pattern (light blue) that shows price symmetry between the two swings at that target. Further up is a price zone of potential resistance from 3.35 to 3.45. An ascending ABCD pattern (purple) reaches its target at 3.35. At 3.39 there is a match with resistance seen at the January peak, while there is an extended ABCD target at 3.42. The range ends with the target from a large rising ABCD pattern at 3.45.

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