Natural Gas Forecast: Key Support Levels Tested as Bulls Eye Higher Targets

Natural Gas Forecast Video for 05.09.23 by Bruce Powers

Following a rise to a trend high of 2.85 last week, natural gas triggers an inside day today with a decline below Friday’s low of 2.735. A four-day low of 2.64 was subsequently reached thereby fulfilling a test of the 34-Day EMA (orange) as support. A mild test of the line occurred on the second breakout day last Tuesday the 29th of August but today is more significant given that natural gas is approaching it from a higher starting price of 2.865.

Given the recognition of the 34-Day line during recent price action the past several months, it would be a stronger move if natural gas completes the retracement with today’s low. A mild intraday bounce occurred once the 2.64 level was hit indicating that the market has recognized the line. However, further confirmation is needed, and additional tests of the line may occur. In addition to the 34-Day line being hit today, a 50% retracement also completed with the day’s low.

Two Trendlines Converge at 2.59, Highlighting a Crucial Support Level

In addition, there are two trendlines just below that 34-Day line that also may lead to a bullish reversal if reached. One line is headed down and one up. They cross at 2.59. This means that 2.59 is the maximum decline that will occur before natural gas starts falling below one of the lines. In addition, the 61.8% retracement also highlights 2.59. When two indicators point to a similar price that zone takes on greater potential significance.

Breakout Above Today’s High is Bullish

Going forward, a bullish signal is triggered on a decisive rally above today’s high of 2.71. The most recent swing highs of 2.865, followed by 3.02 are then targeted. Once a daily close occurs above the lower level the chance of reaching the higher-level increases. In addition, a rise above the 3.02 level triggers a continuation of the advancing trend channel that started from the mid-April lows.

A Close Above 3.03 Confirms a Breakout From the Bottoming Pattern

Natural gas has marked a resistance level over the past six months at 3.02/3.03. That zone defines the top of the potential bottoming formation. Once a daily close occurs above 3.03, confirmation of a breakout from the bottoming pattern will be indicated. At that point the higher resistance zone noted over the past several months from around 3.16 to 3.28 will be on the horizon.

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