Natural Gas Forecast: Bullish Momentum Builds Amidst Technical Signals

Bruce Powers
Published: May 26, 2023, 20:13 UTC

Natural gas shows signs of underlying demand as it rallies to a four-day high.

Natural Gas, FX Empire

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Natural Gas Forecast Video for 29.05.23 by Bruce Powers

Natural gas reversed higher today following a bearish continuation signal yesterday. It looks like the completion of the 61.8% retracement yesterday might have finished the current correction. Further confirmation of strength is needed. Yet, today natural gas rallied to a four-day high, jumped back above the 50-Day EMA and may close above it, and is on track to end Friday at its highest daily closing price in five days. The week will complete with a red inside week candlestick pattern.

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A Decisive Move Above 2.57 is Bullish

A decisive breakout above this week’s high of 2.57 high is bullish with the first target the most recent swing high at 2.69. The 50-Day EMA has recently been noticed by the market for natural gas and today’s close above the line will be another sign that underlying strength is growing as natural gas looks more determined to rise above it for an accelerated trend to the upside. Therefore, watch the relationship between price and the 50-Day line next week as it may provide clues as to what is to come.

Downside Risk Remains

Until a bullish move is confirmed, however, the possibility of further downside exists. The next lower support zone below this week’s low of 2.26 is around 2.17/2.15. That zone includes the completion of the 78.6% Fibonacci retracement, with the uptrend line close by. Just below the trendline is the completion of the developing ABCD pattern at 2.11. That would be the next lower target where support might be seen if natural gas falls below the uptrend line.

Monthly Bullish Reversal Triggered and Could Lead to Upside

A bullish monthly reversal was triggered earlier this month on a rally above April’s high of 2.53. Resistance was seen at this month’s high of 2.69. If natural gas can end May above April’s high, it will provide an additional sign of strength, and it is on a long-term time frame based on the monthly chart. The longer the time frame the more significant the patterns. Of course, this also means that a drop below May’s low of 2.03 is a sign of weakness and it could lead to more aggressive selling at that point.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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