Natural Gas Recovery: Technical Analysis Indicates Potential Rally Ahead

Natural Gas Forecast Video for 25.07.23 by Bruce Powers

Natural gas found resistance last week around the 100-Day EMA with a trend high of 2.79. It managed to close above that line on Thursday but not on Friday. Subsequent, today we are seeing a continuation of the retracement with a day’s low of 2.66. Today is the second rest day where natural gas trades inside the wide trading range seen last Thursday.

100-Day EMA Holding Back Ascent

This is the second rally into the 100-Day line when resistance was seen around the line. Given the relatively shallower retracement recently to the 50% retracement zone upward momentum is slowly improving. Look how the slope of the internal uptrend line is an improvement from the full uptrend line. The increasing angle of ascent represents increasing demand that has not yet fully matched the market price. It reflects accumulation by buyers over time. Not necessarily enough though yet to propel natural gas to new trend highs during its recovery phase.

Key Support Levels to Watch for Bullish Reversals

If the decline continues there are a few price levels to watch for support and a bullish reversal. Friday’s low at 2.62 is the first price level of note. It is followed by the 34-Day EMA at 2.58, followed by the internal uptrend line (approximately 2.56) and then the 50% retracement around 2.51.

Rally Anticipated to Continue Higher

Given the larger technical situation in natural gas it does look like it should continue to rally. A decisive breakout above today’s high of 2.77 provides a bullish signal. Intraday reversals can be watched as well for tighter entries. Subsequently, a daily close above today’s high is needed to confirm strength and then again on a daily close above last week’s high of 2.79. A daily close above the weekly high triggers a weekly bullish trend continuation signal and points to higher targets for natural gas.

Higher Price Target Zones

The first target is around the prior earlier swing high from February, from around 3.00 to 3.02. If natural gas can keep rising from there it heads towards a price marked by the crossing of an uptrend line (top of channel) and downtrend line.

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