Natural Gas Forecast: $2.99 Break Could Target $3.32

$2.83 Flips From Resistance

Natural gas further confirmed short-term support on Monday, reaching a low of $2.83 before buyers stepped in and took back control. That area was also confirmed as support on Friday and suggested the switch from a resistance area to a support zone, which is bullish behavior. An upside bullish breakout from a four-week consolidation bottom pattern triggered last week, along with the joint reclaim of both the 50-day and 100-day moving averages. However, price quickly fell back below the averages and could not close above them. A daily close above the moving average will provide another sign of strength.

Second Try at $2.91 Cluster

Another attempt to reclaim those two key dynamic resistance indicators began on Monday, as Friday’s high of $2.93 was exceeded to reach a higher daily high of $2.95. Notably, the two moving averages have converged near $2.91, as the second reclaim attempt is made. Resistance during last week’s advance to a high of $2.99 was seen at the lower swing high of $2.99 from July. Although a reclaim of the two moving averages will show strengthening of the developing uptrend, a sustained advance above the July swing high is needed for a bullish reversal signal from structure.

Fibs Lead Toward Falling 200-Day

If buyers can continue to drive price higher overall, then it looks like the top potential target would be represented by the 200-day moving average. It is currently at $3.32 and falling and was confirmed as resistance during the prior rally that generated a lower swing high of $3.40 in the beginning of June. Higher up is the 61.8% Fibonacci retracement at $3.07 and the 78.6% Fibonacci retracement at $3.20. Each level presents a potential upside target is strength can be retained during an advance.

So far, price behavior is looking like it wants to rally and test higher potential resistance levels. But in the short-term, consider that this week could result in largely consolidation inside the $2.70 to $2.99 range from last week.

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