Chart Analysis: Natural Gas Strengthens, Approaching Key Price Levels

Natural Gas Forecast Video for 05.01.24 by Bruce Powers

Natural gas continued its ascent today, exceeding yesterday’s high of 2.72 and showing strong momentum with a relatively wide range green candle. The first target zone anchored by the 38.2% Fibonacci retracement at 2.77 was easily exceeded until resistance was seen at the 50-Day MA (orange), now at 2.85. The high of the day was 2.86 at the time of this writing and natural gas is on track to close strong, in the top third of the day’s trading range.

Resistance Seen at 50-Day MA

Resistance, marked by the 50-Day MA, is just shy of the next higher potential resistance zone from 2.88 to 2.94. Two price levels were exceeded today that increase the chance that the next higher price levels will be reached. Once the 38.2% retracement was exceeded the 50% retracement becomes a target, which is at 2.94, the top of the next resistance zone. Further, a standard rising ABCD pattern completed at 2.80 today and it was exceeded, opening the possibility that natural gas may reach the 127.2% extended target at 2.90.

Daily Close Above 50-Day Line at 2.86 Open Door to Higher Prices

A daily close above the 50-Day line is needed next to confirm strength and improve the chance of reaching or exceeding the next target zone. Although natural gas triggered a bearish trend continuation signal when it broke down from the rising channel in late-November, it quickly recovered the long-term downtrend line after falling below it for a couple days near the recent swing low. In addition, as of today it is further confirming the recent breakout above the 200-Day MA (blue), currently at 2.62.

Retracement Should Find Support at 200-Day MA

The initial breakout above the 200-Day line recently occurred on a gap up followed by a short sharp rally indicating strong demand at the time. During the recent retracement the 200-Day MA was tested as support, and it failed as the price of natural gas dropped below it. Going forward, if the 200-Day line acts as support during a pullback or support is found higher, followed by a bullish reversal, a successful test of the line may have occurred. That would increase the chance that the price of natural gas will test higher prices.