Natural Gas Price Analysis: Can It Overcome Resistance at 3.64?

Natural Gas Forecast Video for 02.11.23 by Bruce Powers

Following a sharp advance on Tuesday, natural gas trades inside day Wednesday, as it consolidates near trend highs. The high of the advance is last week’s high of 3.64. Both today and yesterday’s price action tested that resistance zone as the market looks to decide whether the trend is to continue higher, or resistance is strong enough to lead to a correction.

Yesterday’s Decisive Bullish Reversal Opens Up Higher Prices

A short correction ended with yesterday’s low of 3.318. It was a very brief undercut of the prior low at 3.32. However, yesterday’s strong advance flipped the correction into a buying opportunity. Therefore, natural gas is anticipated to continue higher following further confirmation of strength. A decisive upside breakout is triggered on a move above 3.64, with natural gas then heading towards the next potential resistance zone from 3.78 to 3.86. Included within that price zone is the 23.6% Fibonacci retracement of the complete downtrend that starts from the August 2022 trend high at 3.86.

Further Correction is Possible if Little Upside Follow Through

Nevertheless, an upside continuation hasn’t triggered yet and therefore further downside also must be considered. Today’s low is 3.43 and a break below it will be short term bearish as a test of yesterday’s low as support will be on the table. This also means that a break below yesterday’s low is possible as natural gas looks to fill the gap from October 27. The 50% retracement is at 3.26 and the gap fills at 3.28. Together, these two price levels can be seen as a potential support range. Further down is a more significant support zone marked by the 200-Day EMA and 61.8% Fibonacci retracement at 3.18 to 3.165, respectively.

Monthly Breakout Triggers on Upside Continuation

If natural gas can continue its rally over last week’s high, it will have triggered a monthly breakout of October’s high. A monthly breakout indicates that the long-term pattern is confirming strength. Further, a bullish breakout of the rising parallel trend channel as seen in the daily chart will also be breaking out to the upside. These two signals combined, a breakout of monthly high and a breakout of rising channel, from a technical perspective should help natural gas to test higher price levels.

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