Natural Gas Price Forecast: Hovers Near Support Zone

Natural gas looks like it is trying to find a bottom to the current bearish retracement, but it is not clear yet whether it will be successful. On Thursday it triggered a one-day bullish reversal on a rally above Tuesday’s high but encountered resistance at an internal uptrend line that previously represented dynamic trend support. That line is the bottom of a rising parallel trend channel. The day ended with a weak close in the lower half of the day’s trading range.

Today, Friday, natural gas continued to reflect weakness as it dropped below yesterday’s higher daily low before finding support at 3.00 for the day. That is still above the swing low of 2.98 that was reached on Wednesday. The bearish retracement fell through both the internal uptrend line and 20-Day MA (purple) on the way to the low. Each had previously represented dynamic support for the rising trend. A 61.8% retracement was completed at 3.02.

Conflicting Signals

So, there are conflicting signals coming from the price behavior of natural gas. It remains below the lower rising trend channel line, which is bearish, but has retained an area of previously identified support around the 61.8% retracement. And for the prior few days it managed to close just a little above support at the 20-Day line. Natural gas remains on track to close at or above the 20-Day MA today as well. The 20-Day line is currently at 3.08.

Bullish Behavior

There was a bottom tail on Wednesday and there is currently a bottom tail today. Given that they are occurring in a support zone, it shows bullish behavior as the buyers stepped up following intraday weakness. If natural gas ends today in a similar position a second bullish hammer candlestick pattern will be generated. The first was on Wednesday. In summary, natural gas is holding a support zone that could lead to a rally and possibly an eventual challenge to the recent 3.07 trend high.

Strength Shown Above Today’s High of 3.00

If the day ends with a bullish hammer, a rally above today’s high of 3.10 will provide a bullish signal. But natural gas will still be below the lower channel line, and it may continue to act as resistance. Therefore, a bullish reversal will be indicated on a rally above Wednesday’s high of 3.035. Further strength would then be shown on a move above the four-day high at 3.03. It is possible that natural gas could rally yet stay below the trend channel. For the bullish advance to have a better chance of continuing, a daily close will need to eventually be seen above that line.

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