Chart Analysis: Unveiling the Battle Between Bulls and Bears in Natural Gas Market

Natural Gas Forecast Video for 25.01.24 by Bruce Powers

Natural gas continued to strengthen on Wednesday, closing a gap and testing resistance around the 200-Day MA (blue). The high for the day was 2.66 at the time of this writing and the 200-Day MA is at 2.67. A resistance zone begins around the 200-Day line and goes to the 38.2% retracement at 2.72 and then to a high of 2.76, which is represented by the 20-Day MA (purple). Also, close by is the 50-Day MA at 2.74.

200-Day Moving Average Tested as Resistance

The 200-Day line failed to hold as support on the way down last week and it is now being tested as resistance. It tells us something about the strength of demand and the bottoming process. Monday’s swing low at 2.31 is slightly higher than the December swing low, a mild sign of strength. In addition, it may indicate a successful test of support around the long-term downtrend line. Price was rejected to the upside following a short time under the line in December. This week may be the second test.

Daily Close Above 2.76 Should Lead to Higher Prices

A daily close above the 200-Day line would improve the chance for higher prices and the possibility that this week’s low, along with the December swing low, creates a double bottom. However, we won’t know until there is a breakout above the recent swing high at 3.39. A breakout above the 200-Day line followed by a daily close above it increases the chance for that to occur.

Notice that the 20-Day and 50-Day MAs have converged at the top of the resistance zone noted above. This means that a breakout above 2.76 will put the price of natural gas above the three moving averages. That will be a sign of strength if natural gas can stay above the lines and rise to test higher prices. The 50% and 61.8% retracements as shown on the chart may see minor resistance.

Relationship to Lower Channel Line Will be Revealing

Another key possible resistance line is the long-term uptrend line. It is at the lower boundary of the rising parallel trend channel. Natural gas rose above it for a short time earlier this month before encountering resistance around the 78.6% Fibonacci retracement and subsequently falling back below the 200-Day MA.

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