Natural Gas Price Forecast: Nears Critical 50-Day MA Test Amid Rally

Natural gas continued to rally on Monday with a new trend high of 2.20. It is now very close to completing a test of resistance around the 50-Day MA, currently at 2.215. There is a chance that the moving average line may be exceeded, especially given today’s advance and the early successful test of support at the 20-day MA.

The 20-Day line was busted seven days ago and today will be the first day with a low above the 20-Day line. That is a sign of strength that needs further confirmation. Tuesday’s session may be more telling as both the United States and Canada are on holiday today and that takes liquidity out of the market.

Next Pivot, 50-Day Moving Average

Nonetheless, today’s price action looks like it may lead to the first touch of the 50-Day MA since July 2, the day natural gas fell below both the 50-Day MA and 200-Day MA on the same day. That is because they were crossing, the 50-Day line rising above the 200-Day. Note that the recent swing high, a key pivot, is also located at an intersection of the 50-Day MA crossing below the 200-Day MA. Moreover, the breakdown on July 2 also triggered a decline below a previous swing low that had significance of its own.

The same thing may be about to happen soon as natural gas looks poised to attempt to recapture the August high of 2.30. If it does, a breakout through the intersection of the 50-Day and 200-Day MAs will also occur. That would mirror what happened during the bearish reversal from the June 3.16 peak.

Double Bottom Pattern Forming

In addition, there is a double bottom bullish reversal pattern setting up in the daily chart of natural gas. A breakout of the pattern would also occur on a rise above the 2.30 swing high. Subsequently, a daily close above that level would confirm that breakout and put the price of natural gas back above both the 50-Day and 200-Day MAs. That would leave it in a strong position to eventually challenge potential resistance around the top trendline. Depending on when it is approached, there are two Fibonacci retracement levels for reference. The 61.8% retracement is at 2.87 and the 78.6% retracement at 2.89.

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