Natural Gas Price Forecast: Breakout Potential Above 50-Day MA

Bruce Powers
Published: Apr 2, 2024, 20:16 UTC

Recent price action indicates optimism for natural gas, with potential for a breakout above the 50-Day MA and targets at previous swing highs.

In this article:

Natural gas rallies to test resistance around the 50-Day MA with the day’s high of 1.88. So far, resistance has been seen off the high leading to a minor intraday pullback. Nonetheless, at the time of this writing, natural gas is on track to close strong, in the upper quarter of the day’s trading range, indicating it probably wants to go higher.

On Monday, sentiment improved as the daily close was above the long-term downtrend line for the first time since falling below the line on January 29. A daily close above the 50-Day line will provide the next confirmation of strength.

A graph with lines and lines Description automatically generated with medium confidence

Improving Bullish Outlook

Recent price action has provided several reasons for optimism from the bulls. Natural gas has recently recaptured the 20-Day MA, exceeded the most recent swing high of 1.83, and closed above the long-term downtrend line. Further, the recent March 25 swing low is higher than the trend low from February. And natural gas is on track to close above the downtrend line for the second day today.

Watching for Close Above 50-Day Moving Average

If a daily close above the 50-Day line does occur, natural gas would next be heading towards previous swing highs. The first is at 2.01 and the second target is around 2.17. A decisive rally above the 2.01 price level will trigger a breakout of a bullish double bottom pattern that has set up since the recent higher swing low completed. When measuring the pattern, a potential target around 2.50 is identified. If reached, it would put the price of natural gas just below the 200-Day MA, currently at 2.57. If the 2.50 target is reached it wouldn’t be surprising to see prices rise to test the 200-Day line as well.

Note that a breakout above the 2.17 price target heads into a gap. Subsequent price levels to watch are then 2.31 and 2.42. However, there is an interim level within the gap at 2.235. That is a previous swing low and the 38.2% Fibonacci retracement.

Higher Swing Low Supports Continuation Higher

The definition of an uptrend is a series of higher highs and higher lows. Since the recent swing low of 1.59 is a higher low than the trend low at 1.52, part of the trend definition has been met. It is a defined trend once the higher high is in place. That will occur on an advance above the 2.17 price level. So, an advance above 2.17 will not only trigger a breakout of a double bottom pattern, but it will also confirm a rising trend.

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

About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

Did you find this article useful?