Natural Gas Price Forecast: Strengthens, Eyeing Key Breakout Levels

Natural gas continued to show signs of strengthening on Friday as it rallied above the 200-Day MA for the second day in a row. However, today is shaping up for a close above the 200-Day line, which is now at 2.26. A breakout occurred yesterday as well natural gas was unable to close above the line.

Today’s advance increases the chance for a breakout of a double bottom pattern on a move above 2.30. Although today’s advance is set to close above the 200-Day line it will likely end with a narrow range day having encountered resistance at 2.29, just below the 2.30 swing high.

Key Resistance at 2.30

Even though natural gas will show strength with today’s close relative to the 200-Day MA, it has not been able to breakout above the 2.30 resistance level. Therefore, it may need a little time with a quick pullback or consolidation before it tries. The narrow range day shows momentum diminishing at a likely resistance level.

A decisive breakout above the 50-Day MA occurred yesterday, so support may be seen there if it is reached. It would be a stronger indication of demand if support is found above or at the 50-Day MA rather than below it. Yesterday was the first daily close above the 50-Day line since July 2 and along with a rise above the 200-Day line today shows constructive development of the advance.

Double Bottom Breakout Above 2.30

A decisive breakout above 2.30 will trigger a breakout of a double bottom pattern. The formation points to a potential minimum target of 2.72. That would put it close to the 61.8% Fibonacci retracement level at 2.67. Close enough to consider a potential resistance range from 2.67 to 2.72. However, the first higher target zone is around the 50% retracement at 2.52.

Weekly Chart Confirms Strength

The weekly time frame shows an improvement in the strength of natural gas as well. This week’s closing price will be near the high of the week’s range and the highest weekly closing price in eight weeks. Trading has occurred largely below the 20-Week MA during that time, and it will challenge the 20-Week line at 2.33. It is possible that an advance will see resistance there, but it is also possible that natural gas rises right past it.

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