Bullish Momentum Building: Natural Gas Poised for Upside Breakout

Natural Gas Forecast Video for 12.07.23 by Bruce Powers

Natural gas continues higher off 2.54 support from two days ago. That retracement low was just shy of a 50% retracement before buyers stepped in to turn prices higher. Today, natural gas broke out above the small trendline defining dynamic resistance of the retracement. If it can close above the line today it will have exceeded another barrier that opens the door to higher prices. Assuming demand continues to improve natural gas would then be on track to at least test the recent trend high of 2.88 if not exceed it.

Breakout Confirmation Needed

Once a daily close occurs above the small trendline it will be important to observe the price behavior of natural gas. We would like to see a pickup in momentum to show growing demand as the market recognizes that a bullish technical trigger has occurred. Instead, consolidation could follow, which would add uncertainty to the upside continuation.

Signs of Strengthening

There are a few things to consider in support of the bullish side. If last week’s low holds until new trend highs, there is a clear acceleration in the angle of ascent of the developing uptrend. This reflects improving demand. The internal uptrend line starting from the early-June swing low and connecting last week’s swing low shows the increase in the slope of the trend. It is further confirmed by the 34-Day EMA (orange), which began rising after the breakout day on June 15, and price has stayed above it since.

Further, the correction has been relatively shallow when compared to the previous two retracements. The first was approximately 78.6% off the April 28 swing high and the second around 61.8% starting from the May 19 swing high.

Failure is Always Possible

If instead of a continuation to the upside we start to see clear weakness, today’s low of 2.63 will be the first daily support level followed by this week’s low at 2.57. And of course, a drop below last week’s low of 2.54 signals a continuation of the correction into lower prices with the next lower support zone starting around 2.51.

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