Bullish Breakout: Natural Gas Strengthens Amidst Technical Signals

Natural Gas Forecast Video for 16.05.23 by Bruce Powers

Natural gas triggers a bullish breakout of the inside week from last week. It is also back above the 34-Day EMA and will close above it on a daily basis. Each indication is a sign that natural gas is strengthening. Also, notice that the relative strength index (RSI) has formed an ascending triangle pattern with a potential breakout on deck to happen soon.

Monthly High Pivot in Sight

The next higher pivot of significance is at the swing high of 2.53 from April 28, which is also a monthly high. A daily close above that high will trigger a continuation of the developing uptrend. Subsequently, the next higher key resistance zone is from around 2.61 to 2.67. That zone is derived from Fibonacci confluence, a prior minor swing high, plus the completion of a rising ABCD pattern.

The break of a monthly pivot will be significant as it is a signal on a longer time frame. This increases the chance that natural gas may react in a bullish fashion once it breaks out above a monthly price level.

Weekly Support to Watch

Support of note is at the swing low of 2.03. The bullish outlook is put into question if natural gas closes below that swing low. Nevertheless, a drop below last week’s low of 2.14 is a clear sign of weakening. At that point either natural gas will retest recent lows or chop around further in a relatively sideway range. The current bottom pattern is an expanding triangle. Natural gas has traded within the boundary of that pattern since mid-April, and it could easily continue to do so for a while longer.

Two More Daily Closes Above 34Day EMA Changes Pattern

Natural gas will end the day above the 34-Day EMA. There have been only two daily closes above that line since price went below it back in December. Two more daily closes above the line will change the pattern. Once this happens, the chance of natural gas coming off the bottom improves. The first rally off the bottom in February was aggressive and sharp. We could see something similar again as natural gas moves back on the radar.

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