Natural Gas Outlook: Potential Breakout Signals Strength

Natural Gas Forecast Video for 15.08.23 by Bruce Powers

Following a successful test of support at a retracement low of 2.70 last week, natural gas rests and trades inside Friday’s range. Last Friday’s 2.70 low tested the downtrend line as support and price was rejected to the upside. Friday completed a bullish hammer type candlestick pattern. Although it is not the best-looking hammer it does qualify. Yet, a bullish breakout is needed to confirm a continuation of strength. As states, that did not yet happen today.

Breakout Above 2.83 for Reversal Signal

Going forward a breakout above Friday’s high of 2.83 will provide a daily reversal signal. Strength is subsequently confirmed on a daily close above 2.83. In this case, a first target would be back at the recent resistance zone from around 2.99 to 3.03. The trend high is now 3.02.

Recognition of 21-Day EMA Support

On last Friday’s pullback natural gas also tested support of the 21-Day EMA trending indicator, now at 2.69. That behavior shows the market for natural gas recognizing the line. It happened as natural gas started rising out of the consolidation bottom that has been forming in recent months. This indicates that natural gas may be ready to trend again. If so, and it looks likely, the recent 3.02 swing high will be tested as resistance and likely exceeded to the upside. You can see the choppy behavior recently relative to the 21-Day line, as price rotates from trading above and below the line. Future approaches towards the 21-Day lines can be anticipated to find support at or above the line.

Dynamic Resistance from Trendline and 200-Day EMA

Once a daily bullish breakout occurs natural gas could potentially continue to new trend highs sooner rather than later. If that happens the next higher target zone starts around 3.19 and goes up to around 3.31. A little higher is resistance of the 200-Day EMA at 3.38. Notice how both the downtrend and uptrend lines cross in that price zone, with the downtrend line potentially more significant. Both the downtrend line and 200-Day EMA provide dynamic resistance to the trend. Resistance is likely to be seen on this first approach given that the 200-Day line has not been tested as resistance since natural gas dropped back below the line in December.

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