Natural Gas Price Forecast: Rebounds, Signals Strength with Key Reversal Pattern

Natural gas triggered a one-day bullish reversal on Monday following a successful test of support earlier in the trading session. Unless there is a sharp fall before the end of the day, a key reversal day pattern will be complete. Monday’s opening price was below Friday’s low of $3.81 and today’s closing price will likely be above Friday’s high of $3.95.

Also, today’s closing price will likely be the highest daily closing price in four days, another sign of strength. The key reversal day shows strength and improving demand. Trading continues to be strong at the time of this writing, as natural gas remains in the upper quarter or so of the day’s trading range. Currently, the high of the day was $4.17.

Strong Support Leads to Rising Prices

Strong support was seen from the day’s low of $3.74. It is a price area discussed over the past week or so as being potentially a significant support zone since it marks an area of confluence. The 20-MA is at $3.76, there is a 50% retracement level at $3.73, and the 50-Day MA line is at $3.73. Given the bullish reaction, it looks clear that the price zone was recognized. Therefore, a bearish retracement might have completed today, opening the way for a continuation towards resistance at recent highs and possibly new trend highs.

Bearish Retracement Looks Complete

The next sign of strength will be on a rally above the five-day high and prior interim swing high at $4.19. That is also a weekly high from last week. There is then a potential resistance zone from the January high at $4.37 to the February high at $4.48. It is interesting to note that the recent pullback took a form like a falling bullish wedge. A bull breakout triggered today.

This puts natural gas in a bullish position to possibly reach new trend highs. The next higher target is a 50% retracement of a previous interim decline at $4.56. Note the resistance was seen around a top trend channel line at each of the recent swing highs. Nonetheless, depending on how prices rise, natural gas could hit the 50% retracement target and stay below potential resistance around the top trendline.

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