Natural Gas Price Forecast: Bullish Breakout Fizzles, Testing Support Levels

Bruce Powers
Updated: Jun 4, 2024, 21:24 GMT+00:00

After an initial bullish breakout, natural gas faces resistance and is testing support levels, with eyes on the 20-Day MA and 200-Day MA.

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Natural gas triggered an upside breakout of a bullish flag on Tuesday, but quickly showed signs of failure by falling back into the consolidation pattern. A bullish breakout triggered a rally above yesterday’s high of 2.80 earlier in the session. However, resistance was seen at 2.83, leading to a decline. At the time of this writing the bears remain in charge and natural gas is trading near the lows of the day. It looks to be heading for an eventual test of support near the lower boundary line of the pennant consolidation pattern. That price level is estimated at 2.54 if reached today and is close to the 20-Day MA, currently at 2.52.

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Pennant Pattern Failure May Lead to Resized Pattern

Although today’s breakout is showing signs of failure, it is also possible that the pennant pattern expands into a larger consolidation pattern. Certainly, it is too early to say but how the price of natural gas behaves near potential support levels should leave clues. Nevertheless, a new top pennant boundary line has been added to the chart using today’s high.

In addition to possible support of the 20-Day line mentioned above, the 200-Day MA is at 2.45. It is a key long-term trending indicator and had one successful test as support last week with a 2.475 swing low. Therefore, it should act as an area of support again, or strong support is seen at a higher price level.

Key Trend Support at 20-Day MA and 200-Day MA

The 20-Day MA may provide a higher price level to find support than the 200-Day line. It has not yet been tested as support since the price of natural gas gapped above it on April 26. Notice that the 20-Day MA is on its way to converging with the lower boundary line of the pennant and it now matches the price level from the minor interim swing low at 2.52. Two indicators pointing to the same price add to the potential significance of the identified pivot. Therefore, natural gas is anticipated to retain a bullish posture if it stays above the 200-Day MA average, and more so if it stays above the 20-Day MA.

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.

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