Natural Gas Price Forecast: Rises to $3.58 Before Facing Resistance

Natural gas proceeded to advance on Tuesday, rising to a high of $3.58 and completing an initial target from a small rising ABCD pattern (light blue) at $3.58. The advance broke out above both the 38.2% Fibonacci retracement at $3.51 and the 50-Day MA at $3.53, which was a sign of strength. However, since the daily high was reached, natural gas has weakened and fallen back below the line, at the time of this writing.

A daily close above the 50-Day line will be a stronger indication of strength than a daily close below the 50-Day line. Also, a daily close above the midpoint of the day’s trading range, currently at $3.50, will be a stronger indication than a close below that price level.

Close Above 50-Day MA Will Confirm Strength

A reclaim of the 50-Day MA was a sign of strength but the next target was hit at $3.58, followed by intraday signs of resistance. If demand can be retained, then natural gas looks likely to at least tap the 20-Day MA at $3.60 to test it as resistance. Moreover, the 20-Day line is declining and will likely converge with today’s high at $3.58 soon.

If the 20-Day line continues to fall, it risks dropping below the 50-Day MA. That would be a sign of weakness. As noted above, a daily closing price above the 50-Day line would show greater strength than a close below it. And a stronger close increases the chance that the 20-Day MA can be reclaimed as well.

Sustained Resistance at 50-Day MA Could Lead to Pullback

If the price area around the 50-Day MA continues to show signs of resistance, a bearish pullback to test support levels becomes a possibility. There are a couple key price levels to watch if that is the case. There is a minor swing low at $3.30 from last Friday, which is followed by a more significant swing low at $3.16.

That $3.16 swing low is more significant given its importance to the rising trend structure of higher swing lows and higher swing highs. It is marked (C) as a prime component of the rising ABCD pattern. Also, notice the small rising trendline marking dynamic support rising from the $2.99 swing low (A). That line can be watched for initial signs of weakness. As it looks now, today’s low at $3.43 can be used as a proxy for the trendline.

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