Natural Gas Price Forecast: Rebounds with Potential Breakout Above Key Levels

Natural gas dipped to a five-day low of 2.69 on Friday before encountering increased demand that led to an intraday bullish reversal. The subsequent rally reclaimed yesterday’s low of 2.83 and natural gas is on track to likely close in a bullish position, near the highs of the day. If Friday’s session closes in the top third of the day’s trading range, a one-day bullish hammer candlestick pattern will have formed.

Today’s low also plays a part in the potential for a bullish reversal on a move above today’s high. A successful test of support near the rising 20-Day MA (purple) earlier today and the subsequent bullish reaction, also point to improving demand. At the time of this writing the high for the day was 2.83.

Successful Test of 20-Day MA is Bullish

Today’s price action shows a successful retest of support around the 20-Day MA, which followed the first successful test on November 4. It potentially clears the way for a possible new breakout attempt about the 3.02 high (B). The last attempt failed attempt occurred on Wednesday. It remains to be seen whether that high retains resistance or whether a sustainable bullish breakout triggers. A daily close above 3.02 would confirm a breakout and put natural gas in a position to test higher potential targets.

Near-term Symmetry Points to 3.22

The first target would be the swing high from August at 3.16. But that level should be easily surpassed given the potential for a strong market response. There are two patterns that would be triggered. A sustained rally above 3.02 would trigger a breakout of a large symmetrical triangle pattern, as well as a continuation of the rising trend that began from the August swing low.

If the 3.16 high can be exceeded, the completion of a small rising ABCD pattern (purple) point to 3.22. But that is a relatively easy target to hit and possibly surpass. A more significant target range looks to be from 3.35 to 3.45, which is where there is a confluence of targets from Fibonacci projections and price structure.

Watch Behavior Following a Breakout

Regardless of the potential for higher targets to be reached as indicated by the analysis, how the price of natural gas behaves following a breakout should provide clues as to the strength or weakness of demand. There is always the possibility of a failed breakout. In general, the breakout of a trendline may not be as reliable as a break above a horizontal price level. This is why a break above a prior swing high in natural gas, especially if it makes up part of the triangle structure can be an important confirmation of strength.

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