Natural Gas Price Forecast: Tests Support Amid Uptrend, Eyes Higher Targets

Natural gas pulled back on Friday following a new trend high of 2.41 earlier in the session. The day’s low of 2.29 tested support at the double bottom breakout level of 2.30. A daily close above 2.30 will confirm the test of support. Although natural gas declined for the day, a pullback to test prior resistance as support is typical in the progression of an uptrend. However, if a breakdown below today’s low triggers, a drop to test support around the 200-Day MA is likely. It is currently at 2.24.

Minor Pullback is a Sign of Strength

Since the August swing low of 1.875, natural gas has had one leg up followed by a minor pullback to 2.125 (C). The pullback completed a 38.2% Fibonacci retracement and then reversed higher. Finding support after a relatively minor pullback is a sign of strength. This week’s bullish continuation above the 2.30 interim swing high confirmed the second leg up. The rise also triggered a double bottom bullish reversal pattern as the neckline is 2.30 swing high. Therefore, the technical clues point to a continuation higher.

Second Leg Up off August Low Targets 2.54

A rising ABCD pattern is shown on the chart with an initial target of 2.54. That is a potential pivot level as there will be symmetry in price between the two swings in the pattern. The 50% retracement is near to that target at 2.52. As of today, the 20-Day MA has begun to cross above the 50-Day MA, another sign that the trend is strengthening. This doesn’t mean that natural gas goes straight to higher targets, but it has the potential to do so eventually.

Weekly Breakout Confirmed Above 2.29

Another indication for the near term is related to where natural gas ends in the week. A bullish breakout in the weekly chart also occurred on the move above 2.30. The high last week was 2.29 So, a weekly close above 2.29 will confirm the breakout on the weekly time frame and suggests that the buyers remain in charge. Further, a close today above 2.29 will be the highest weekly close in nine weeks. Nevertheless, natural gas has advanced off the August bottom and it would not be surprising to see a a short rest before it is ready to proceed higher.

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