Natural Gas Price Forecast: Triggers Bullish Reversal Signal

Natural gas triggered a bullish reversal signal on Wednesday as it broke out from a descending bullish wedge pattern (orange trendlines). Resistance for the day was seen around the 20-Day MA (2.10) at the day’s high of 2.12. The 20-Day line has marked key trend resistance for the decline since around June 20. Today’s sharp rally and test of resistance at the 20-Day line makes an eventual bullish breakout above that line more likely.

Watching for Breakout Above 20-Day MA

Above the 20-Day line at 2.10 is last week’s high of 2.15. That will be the next price level to watch following a breakout through the 20-Day MA. Therefore, a bullish weekly reversal will trigger on a rise above that high. The top of the wedge and prior swing high of 2.26 would then be next on the agenda. Higher up is the initial upside target of 2.37. That price level is the 200-Day MA and the 38.2% Fibonacci. Once the 20-Day MA is broken through the 200-Day line becomes the next moving average target.

If natural gas can maintain current levels or advance further into the end of August, it has a chance to complete a bullish candlestick pattern set up on the monthly time frame. Notice that there has been a minor bullish divergence recently with the relative strength index momentum oscillator (RSI). As the price of natural gas has continued to fall the RSI has begun to trend up.

Solid Support Seen at Lows

The recent retracement low completed a 78.6% retracement and a successful test of a prior support zone. Given the bullish reaction today, it looks like that could be the bottom for some time. This puts natural gas in a position to eventually once again test resistance at the top trendline. That may help draw buyers as this new test may have greater success than the prior attempt.

Since the possibility of an eventual upside breakout exists, the strong bullish momentum that we saw today and yesterday may continue to propel natural gas higher. If the 200-Day line is exceeded to the upside the 50-Day line at 2.46 becomes a target, along with the 50% retracement level at 2.52.

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