Natural Gas Price Forecast: 50-Day Support Keeps Bullish Case Alive

50-Day Average Reinforces Bullish Support

Natural gas found support near the 50-day average for the second day in a row on Friday. It bounced from a low of $4.20, which put it in a position to end positive for the day. Thursday’s low of $4.18 also found support near the 50-day average. As noted previously, the 50-day average is a key dynamic support zone for the first pullback after Tuesday’s bullish reversal as the prior five days indicated resistance near the 50-day line. This suggests a bullish continuation if strength is sustained above the 50-day line.

Short-Term Resistance Caps Recovery Attempts

The 10-day average, at $4.12 currently, was also recovered recently and it can be used in conjunction with the 50-day average since it is relatively close. Given downside pressure represented by the 20-day average at $4.47 it would not be surprising to see further tests of short-term support. A failed upside breakout of the 20-day line on Wednesday confirms it as a key short-term dynamic resistance zone. Until there is a daily close above the 20-day line, resistance can continue to be expected up to this week’s high of $4.59.

Fibonacci Levels Define Upside Targets

This week’s advance found resistance just shy of a 50% retracement level at $4.65 and prior resistance from November at $4.69. Together, they suggest a potential resistance zone from $4.65 to $4.69. If that price zone is eventually surpassed the 61.8% Fibonacci retracement at $4.84 marks an upside target along with the March peak at $4.90. Certainly, a drop to test support near the 10-day average followed by a swift recovery of the 50-day could signal the beginning of another bullish momentum move. At the least that is something to watch for as a pullback to test support is common before a momentum thrust.

Weekly Structure Signals Volatility with Bullish Bias

A positive sign for the bulls is a weekly close above last week’s high of $4.22. That will complete a bullish outside week reversal. Although this pattern reflects bullish price action, the relatively wide weekly range could lead to choppy moves within last week’s range. This week’s high of $4.59 would need to be recaptured for a weekly bull signal. A long-range bearish engulfing candle from three weeks ago shows price imbalances as the seller clearly took control. That could lead to a test of prices higher in that week’s range and is therefore supportive of the 61.8% retracement target being reached if bullish signs continue.

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