Navigating Trends: Natural Gas Strives for Higher Prices Amidst Challenges

Natural Gas Forecast Video for 21.12.23 by Bruce Powers

Natural gas tried to go higher earlier in Wednesday’s session with an advance above Tuesday’s bullish hammer candlestick pattern. However, it quickly encountered resistance at the downtrend line with a daily high of 2.59. Sellers subsequently took over and dropped natural gas to a low of 2.45 at the time of this writing. Little progress has been made but natural gas continues to point to higher prices, baring a drop below yesterday’s low of 2.385.

Daily Close Above 20-Day MA Open Higher Prices

As noted, natural gas recognized the short downtrend line as resistance today. It is close to seeing the 20-Day MA (red) merge with the trendline thereby providing a second indicator marking similar areas of price. An upside breakout above today’s high of 2.59 provides the next sign of strengthening. Nonetheless, a decisive rally above this week’s high of 2.60 will be needed to confirm strength as that is the top of the current advance. In this scenario, today is a rest day prior to a continuation higher.

The 20-Day MA, which defines dynamic resistance of the recent relatively sharp decline is slightly above 2.60 at 2.62. A rally above the 20-Day line will confirm strength and a breakout above both the downtrend line and 20-Day line. The chance for a continuation higher then improves. Since the 20-Day line is confirming the downtrend line and vice versa, a daily close will be needed above the 20-Day line before bearish risk decreases. Until then, a test of recent lows remains a possibility.

Higher Targets May be Tested

Following a daily close above the 20-Day MA, natural gas heads first towards a price range from 2.77 to 2.79, consisting of the 38.2% Fibonacci retracement at 2.77 and a prior weekly high of 2.79. That is followed by the 2.88 price zone. Notice that the 2.88 zone has been recognized by the market several times in recent months. It also shows where two trendlines cross, an uptrend and downtrend line. Further, the 20-Week MA also marks that price area. Higher still is the 50% retracement at 2.94, which is confirmed by the 50-Day MA (orange). Notice that the 50-Day line has started to converge with the 50% price area.

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