Natural Gas Price Forecast: Poised for Upside Despite Intraday Pullback

Natural gas attempted a continuation higher on Tuesday as it triggered a breakout above Monday’s high of 2.25. However, resistance was quickly seen off that high leading to an intraday pullback. Trading continues at the lows of the day at the time of this writing. Natural gas is on track to end the day with a failed one-day breakout and a red candle. Plus, the day’s close will likely be near the lows of the day, currently 2.17. Nonetheless, a successful test of support at the 20-Day MA occurred yesterday and price was clearly rejected to the upside.

Higher Swing Low is Bullish

Following today’s pullback natural gas should be ready to proceed higher. Monday’s low of 2.10 created a higher swing low relative to the early-August low of 1.88. It was the first pullback following a bullish reversal off the 2.10 bottom. In other words, it looks like an uptrend is still in its beginning stages to provide plenty of potential upside. The 20-Day line at 2.10 remains critical near-term support for the uptrend and provides the C point for a rising ABCD pattern.

Today’s weakness should be resolved to the upside given recent signs of strength in the price of natural gas including, breakout of falling wedge three weeks ago, rally above 20-Day MA followed by successful test of the line as support, and the advance above the interim swing high of 2.39 last week. Together, these indications show a strengthening trend.

Bullish Signal Above 2.25, Then 2.30

A rally above today’s high of 2.25 will be a sign of strengthening that should be followed by a breakout above last week’s high of 2.30. Once that triggers the 200-Day MA at 2.32 becomes a target. However, notice that the 200-Day line has been slowly declining recently towards the 2.30 peak, putting it very close to last week’s high. Therefore, using the 200-Day line as a breakout level may provide greater confidence that a breakout would be followed by rising prices.

Above the 200-Day MA is the 50-Day MA at 2.36. It is confirmed by the 38.2% Fibonacci retracement at 2.36. If natural gas can rise above there it will likely look to complete an initial target for a rising ABCD pattern with the C leg beginning from the most recent swing low at support of the 20-Day MA.

For a look at all of today’s economic events, check out our economic calendar.