Natural Gas Price Forecast: Poised for Bullish Breakout Amid Near-Term Momentum

Natural gas continued to strengthen on Monday as it rose above Friday’s high to test resistance around Thursday’s high. Support seen at the low of the day 2.83, which was around Friday’s high at 2.84. This reflects near-term strength as demand was strong enough to keep the price of natural gas from falling into Friday’s price range.

The high of the day at the time of this writing was 2.98, which is slightly above the top boundary line of a symmetrical triangle pattern. Trading continues near the top third of the day’s trading range and if natural gas can end the day above the opening price at 2.98, it may complete a bullish hammer candlestick pattern. Nonetheless, a decisive upside breakout will be needed to signal a continuation higher.

Rally Above 3.02 Triggers Breakout

A decisive rally above the recent swing high of 3.02, which is also the high for the current advance, will trigger a continuation of the rising trend that began from the August swing low. In addition, a bull breakout of a symmetrical triangle consolidation pattern will be indicated. Subsequently, a daily close above 3.02 will confirm strength indicated by the breakout. The next target would then be the June swing high of 3.16. A sustained rally above that price level will further confirm strength following the breakout. Subsequently, upside targets derived from prior swing highs, will then be at 3.39, from the January swing high, and then the 2023 peak at 3.64.

Watch the Behavior of Price

It remains to be seen whether a bull breakout is recognized by the market. Some considerations are whether upside momentum noticeably improves following the breakout, how clear and decisive is the advance, and was the close strong or weak on the breakout day? In addition to the targets from price structure noted above, there are three measured moves marked on the chart as ABCD patterns. They identify potential targets starting at 3.22 (green). If that price level is exceeded, then a large pattern in purple shows completion at 3.35. Further up from there is another target at 3.45 (orange).

Key Support Remains 20-Day MA

Despite the possibility of an eventual upside breakout, until it happens, downside risk remains. Potential support is around the 20-Day MA, currently at 2.70. If the 20-Day line retains support during weakness, the possibility of an eventual upside breakout remains. However, a drop below last week’s low of 2.69 diminishes the near-term potential of an upside breakout and improves the chance for a deeper pullback.

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