Bullish Momentum: Natural Gas Targets Breakout Above Monthly High of 2.79

Bruce Powers
Published: Aug 30, 2023, 20:14 GMT+00:00

Bullish momentum builds as natural gas aims to breach 2.88 June high, eyeing 200-Day EMA resistance thereafter if strength can be sustained.

Natural Gas, FX Empire

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Natural Gas Forecast Video for 31.08.23 by Bruce Powers

Natural gas breaks out to a new rally high on a move above 2.70. The 50% retracement at 2.72 was exceeded and natural gas as continued to advance to complete a 61.8% Fibonacci retracement at 2.79. That price level is strengthened by the fact it is also the monthly high for July. A monthly bullish breakout occurred earlier in August, but natural gas subsequently sold off till reaching support at the recent swing low of 2.42.

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Confirmation Requires Daily Close Above 2.79

The current advance is seeking another attempt to break out on a monthly chart. A daily close above 2.79 is needed to confirm the bullish breakout. Given the longer time frame represented in the monthly chart, a breakout confirmation shows the underlying trend strengthening. Whether natural gas continues to advance from there remains to be seen. Certainly, as seen on the first breakout attempt a pullback or consolidation may follow. Also, an accelerated move higher could also be in the works.

Upward Momentum Evident in Strong Green Candel and Strong Close

Upward momentum has picked up today as seen in the relatively wide range green candle that is looking like it will close strong, near the highs of the day or at least within the top 25% of the day’s price range. Following a second monthly breakout natural gas will next be targeting the June monthly high of 2.88. If it can confirm a breakout above the June high, then two key potential resistance barriers will have been exceeded to the upside. This would be bullish behavior and increases the chance for natural gas to continue to trend higher, possibly up to test resistance around the 200-Day EMA.

Resistance at 200-Day EMA (3.29) Could Tested

The 200-Day line is currently at 3.29 and it is part of a larger potential resistance zone beginning around 3.17 and rising to around the 200-Day EMA. You can see how the 200-Day EMA is sitting around the crossover of two trendlines, the long-term downtrend line and uptrend line at the top of the rising channel. It can be watched along with the downtrend line as they are each getting closer to identifying a similar price area. If the 200 line is reached it would be the first test of resistance of that EMA since price began a waterfall decline in December 2022.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.