Natural Gas Price Forecast: Poised for Bullish Reversal After Testing Key Support

Natural gas successfully tested support around the 200-Day MA earlier in Thursday’s session as it reached a low of 2.22 before finding support. The 200-Day line is at 2.23. Subsequently, support was seen, and buyers took back control to drive the price higher. At the time of this writing, natural gas continues to trade near the highs of the day, and it is on track to close strong, in the top quarter of the day’s trading range. This sets up natural gas for a likely bullish reversal day off key support.

Sign of Strength

A continuation above yesterday’s high of 2.38 will provide the next sign of strength, followed by a rally above the trend high of 2.44 from Tuesday. Tuesday also triggered a bullish breakout on the weekly chart on a rise above 2.41. Notice that improving demand was recently indicated by the purple 20-Day MA crossing above the orange 50-Day MA. Since then, the 20-Day line has been rising away from the 50-Day line reflecting an improvement in the underlying trend.

Breakout Continuation Above 2.44

Once the 2.44 high is exceeded natural gas should be in a good position to challenge higher price targets. The next upside target zone is identified by the convergence of two indicator levels. First there is the 50% retracement of the prior decline that points to 2.52.

A little higher at 2.54 is an initial target from an ascending ABCD pattern (purple). It identifies a potential pivot at 2.54 because that is where there is price symmetry between the two legs of the pattern. The distance in price in the AB advance matches the appreciation in the CD leg of the pattern.

Top Line of Triangle is an Eventual Target

Given that natural gas has recently rallied from support at the low end of a symmetrical triangle pattern that is evolving inside a larger pattern. Notice that an internal uptrend line connects the recent low at point A. That generates a lower boundary line for an internal triangle as the lower uptrend line marks the lower boundary of the larger pattern.

Both triangles have the same top downtrend line. Once a reversal from the bottom of the pattern occurs there is the possibility of reaching the top boundary of the pattern. This means that the 2.54 level is likely to eventually be broken to the upside. If so, the next potential resistance zone looks to be from around 2.65 to 2.72.

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