Decoding Natural Gas: Will the Rally Sustain or Retreat?

Natural Gas Forecast Video for 03.01.24 by Bruce Powers

Natural gas triggered a bullish continuation of its rally on Tuesday, before finding resistance at the day’s high of 2.675 and pulling back. An inside day breakout from a rise above Friday’s high of 2.58 triggered earlier in the session. It was followed by a trend continuation signal on a move above the two-week high of 2.62. That high becomes important in the short-term as today’s intraday pullback has taken natural gas back below the 2.62 breakout level, a sign of non-confirmation.

In other words, a sign of weakness following a bullish breakout. That means the breakout may fail and lead to further weakness or consolidation. However, the clue will depend on the price natural gas ends at today, either above or below 2.62. Signs of weakness are indicated on a close below and strength confirmed on a close above it.

Relationship with Moving Averages Shows Strengthening

Other indications to watch for clues as to the next moves may be provided by two moving averages, the 20-Day and 200-Day simple moving averages (MA). Each has marked resistance over the past 10 days or so. Today, a breakout of the 200-Day MA occurred on a move above 2.62. Notice the price matches the prior recent swing high noted above. Therefore, the breakout has failed at the time of this writing as natural gas is trading below 2.62.

Daily Close Above 2.62 Confirms Strength

The recent breakout above the 20-Day MA triggered on multiple days and was confirmed when natural gas closed above the 20-Day line twice. Again today, it rose further above the 20-Day line than previously. It is currently at 2.52. One a daily close above the 200-Day MA triggers, the indication of strength from today’s breakout is confirmed. Once confirmed, the chance for a continuation of the trend to higher prices increases.

After being below the 200-Day MA for many months, natural gas broke out above the 200-Day MA in late-September and stayed above it until the recent correction. On December 6 a breakdown of the 200-Day line occurred, which is where natural gas traded until today’s upside breakout.