Bullish Signs for Natural Gas: Closing Above Key Indicators Points to Upside Potential

Natural Gas Forecast Video for 09.06.23 by Bruce Powers

Natural gas is on track to complete the day with the highest daily closing price in eight days. Today will be the second day in a row that it closed above both the 34-Day EMA and short downtrend line. Each is a bullish sign that points higher for natural gas. If it is to continue to advance according to the rising parallel trend channel, then it is likely to eventually reach the top trendline of the channel.

First Target Zone in Sight

The first major resistance zone looks to be from around 2.77 to 2.84, consisting of Fibonacci levels, the completion of an ABCD pattern, and the 100-Day EMA. Depending on when it is reached, the top trend line will also be included in the range. That’s the initial identified upside target.

Strength Indicated on Close Above 2.45

A breakout above last week’s high of 2.45 will be needed next to further confirm strength. Nonetheless, it doesn’t look like that will happen this week. Natural gas has been trading inside week this week and would need some strong momentum to kick in during Friday’s session to get it over that price level. If the week ends with an inside week, a breakout above this week’s high will provide a bullish trigger for next week.

Prior Rallies Leave Clues

It is helpful to keep in mind the sharp rally that occurred off the first trend low of 1.97 in February (1) completed a 53.9% advance in only seven days. Subsequently, the last two rallies saw natural gas advance by 30% and 32.2%, respectively. The current rally is up only 11.4% so far. The point being is that there is upside potential for natural gas once it gets going.

If the high of the first target zone of 2.84 is exceeded to the upside, natural gas heads towards the next higher zone from around 2.97 to 3.03. Included within that price target is the completion of a measured move that matches the first 53.9% advance. Note that by then natural gas would also be back above it’s 100-Day EMA.

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