Natural Gas Price Forecast: Bull Breakout Points to Higher Prices

Natural gas traded higher on Thursday, triggering an upside breakout of a bullish hammer candlestick pattern and reclaiming the 20-Day MA. It reached a high of $3.75, at the time of this writing and it continues to trade near the highs of the day. The 20-day line converged with the AVWAP line from March 10, just in time for today’s breakout. That adds significance to the breakout and may increase the chance for higher prices. Today’s rally also took out a four-day high at $3.68, another sign of strength. A daily close above the daily high or the 20-Day line, now at $3.66, will confirm the breakouts.

Reversal from 200-Day MA Support Confirmed

The recent bearish correction provided a successful test of dynamic support at the 200-Day MA. A new higher swing low was established today, which confirms support at the 200-Day MA. On a relative basis, the recent pullback showed underlying strength as the price of natural gas was rejected at the 200-Day line, while the prior two tests of the line failed initially to show support. Confirming the support area is the 61.8% Fibonacci retracement level at $3.35.

New Trend High Potential

Today’s bullish reversal has the potential to lead to a new trend high above $4.15. A rising trend channel looks supportive of the potential for a target zone from $4.35 to $4.37 to eventually be reached. In addition, the 78.6% Fibonacci retracement is a little higher at $4.46. However, the next price level to watch is a prior swing high at $3.84. A sustained breakout above that level opens the door to challenging and likely exceeding the $4.15 interim trend high.

Short-term Weakness Should Resolve to Upside

Given the bullish implications for the price of natural gas, short-term pullbacks will likely be used to accumulate, as traders anticipate the impact of the uptrend aligned on all time frames. The bullish trend channel shows a minimum potential upside. Once price bounces off one side of a channel there is the potential for it to eventually reach the other side. Notice that the top parallel line is confirmed with points. Very short-term support may be seen around the 20-Day MA and Thursday’s high of $3.60. Regardless, the chance for the above bullish scenario weakens if there is a drop below today’s low of $3.51.

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