Natural Gas Price Forecast: Rally Sustains Strength Amid Bullish Hammer Pattern

Natural gas took a rest on Friday and traded inside day. It looks to be establishing a possible bullish doji hammer candlestick pattern that will be finalized once the week comes to an end. And the inside day doji hammer is largely in the top half of today’s trading range, a subtle additional sign of strength. A hammer pattern is established if the open to close range completes near the top of today’s trading range.

Test of 20-Day Line at 2.60 Looks Up Next

A bullish reversal triggered on Wednesday off a 2.21 bottom that successfully tested support around the 200-Day MA (blue). The subsequent counter-trend rally exceeded the 38.2% Fibonacci retracement yesterday before trying to retrace to the 50% level at 2.615.

That price zone is joined by the 20-Day MA, now at 2.60. Before natural gas has a chance to rise above 2.60/2.62 and head for higher targets, it first needs to recapture the 20-Day line and exceed the 50% retracement. Notice that today’s low retraced part of Thursday’s price range but support was found well above the orange 50-Day MA, which was recaptured only yesterday.

Signs of Strength Retained

Despite the recent 26.8% correction that triggered a bullish reversal day from the new trend low of 2.21, the 20-Day MA stayed well above both the 50-Day and 200-Day lines. In concert, the 50-Day MA, a measure for the intermediate trend, remained in an uptrend and above the 200-Day MA during the correction. This is a sign of underlying strength in demand for natural gas that can lead to further highs and a test of resistance around the top trendline across resistance of a large symmetrical triangle consolidation pattern. There are a couple reasons for this assessment.

Underling Demand Shows Improvement

Notice that when looking at the angles of the lower uptrend lines, the slope of the line, that represents the trend, has been increasing. This is due to higher swing lows that have been established since the February bottom. Combine that with the recent rally from the long-term trend indicator, the 200-Day MA, and the price behavior shows improving demand. Next, natural gas either continues to progress inside the triangle consolidation formation or it breaks out. The next potential breakout on the table is to the upside.

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