Natural Gas Forecast: Bullish Price Action Sparks Potential Breakout

Natural Gas Forecast Video for 12.09.23 by Bruce Powers

It looks like the short-term weakness in the price of natural gas got resolved today. On Friday natural gas closed weak, in the lower half of the day’s range. This, after strong moves to above the three-day high and the 34-Day EMA. Today, it fell below Friday’s low to find support at 2.54. From there it rallied back to the opening price area of 2.64. It is on track to end the day with either a bullish doji hammer or hammer candlestick pattern. Subsequently, a bullish breakout is triggered above today’s high of 2.64.

Watching for Breakout Above 2.66

A breakout above the three-day high of 2.66 will then provide the next bullish signal, while a close above it confirms strength. Thereafter, the next two primary targets are the recent swing high at 2.865, followed by the completion of a rising ABCD pattern at 2.94. Certainly, the lower 2.865 level is anticipated to be broken if the current advance off the 2.05 swing low continues.

The ABCD pattern is looking to identify symmetry between the two rising legs of the trend where the change in price is the same or similar. Once that happens, the possibility of a pullback or reversal increases. Also, a break through the price zone is a sign of strength and may see it keep rising.

Weekly High of 2.71, a Target

Nonetheless, 2.71 is the next price level to watch as it was a weekly high. A clear advance above that high shows strength, and a close above it confirms. Once that happens, the chance of reaching the higher price areas noted above increases. The relative strength index (RSI) is supportive of a continuation higher. You can see how each of the of the previous swing lows stopped and reversed around the same level.

The above scenarios identify the recent swing low of 2.50 as a bottom. It clears the way for natural gas to proceed higher without having to chop around further along the bottom. However, if we see the price of natural gas fall below today’s low of 2.54, the situation must be reevaluated.

For a look at all of today’s economic events, check out our economic calendar.