Natural Gas Price Forecast: Rallies After Bullish Reversal; Eyes 2.27

Natural gas continued to rally on Thursday following Wednesday’s bull wedge breakout. The descending wedge pattern (orange line) is a bullish pattern once triggered as it formed in a downtrend. It can mark a reversal or continuation signal depending on the direction of the prior trend.

Yesterday’s breakout was decisive, and the day ended near the highs of the day. Today, there is upside follow through. After a pullback earlier in the session today natural gas found support at 2.03 and turned back up. It continues to show strength after reaching a 12-Day high of 2.18 with trading continuing near the highs of the day at the time of this writing.

Bullish Wedge Breakout Targets 2.27

The target from the descending wedge is the beginning of the pattern at 2.27. It is well on its way there now after breaching the 2.15 interim swing high today. Further, a breakout of the 20-Day MA triggered again today with prices continuing to rise from there.

Given the bullish momentum since Tuesday’s daily reversal and hammer candlestick breakout it looks like the retracement may have found a bottom. It will be clearer if natural gas can get above 2.27 and stay above that level. However, today’s advance also triggered a bullish reversal on the weekly chart with a move above last week’s high of 2.15. A daily close above that level will further confirm strength of the reversal.

200-Day MA Higher Target at 2.36

If the 2.27 swing high can be exceeded the next target is up around the 200-Day MA, currently at 2.36. Very close by is the 38.2% Fibonacci retracement at 2.37. Higher up is a target zone that begins around the 50-Day MA, which is currently at 2.45. The previous interim swing low from late-May is then at 2.47, followed by the 50% retracement at 2.52. Last week’s low may have been the low price for natural gas before it attempts to break out above the top downtrend line. The prior dotted trendline remains a little lower for reference.

Higher ABCD Pattern Target is 3.46 (long-term)

Since a bottom has likely been established a rising ABCD pattern can be drawn to help identify higher price targets. The first target from the pattern is at 3.46. That is a pivot level where the price appreciation seen in the AB leg up matches the CD leg up. Once price symmetry is established the potential for a change increases. Also, a breakout through the pivot is a sign of continued strength.

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