Natural Gas Price Forecast: Bullish Continuation Targets $3.72

Natural gas accelerated higher on Friday, triggering a bullish trend continuation signal and reaching a high of $3.64. That high was right around potential resistance from a three- week high of $3.61 and the middle line (dashed) of a rising trend channel. Nonetheless, natural gas continues to trade near the highs of the day at the time of this writing and may go higher before Friday’s session closes. The breakout above the weekly high is bullish, with the breakout confirmed on a daily close above $3.61, thereby further confirming strength of the advance.

New Weekly Breakout Triggers

A weekly closing price above $3.61 will leave natural gas poised to rise into the next higher potential resistance zone. It is marked by the confluence of several indicators from $3.72 to $3.80. The 61.8% Fibonacci retracement target is at $3.72 and is followed by the neckline of a head and shoulders top formation at $3.73. There is an AVWAP level from the trend high $3.75 and further up is the 50-Day MA at $3.80. Given the potential significance of the 50-Day line, it marks the highest potential target for the current advance. But if it exceeded to the upside, the 78.6% Fibonacci retracement at $3.95 becomes a higher target.

Demand Improving

Natural gas is showing improving demand given the three-week breakout that triggered today and the likely strong weekly closing price, near the highs of the week. A one-week bullish reversal triggered earlier this week, and a strong weekly closing price would show buyers remained in charge heading into the weekend.

That strength could carry over into next week. Since the recent low of $2.86 established a higher swing low and it occurred at a recognized potential support area, the recent bearish correction should be complete, leaving natural gas in a position to further progress its long-term uptrend. Therefore, surprises may be on the upside rather than the downside.

Head and Shoulders Top Resistance Zone

Of course, natural gas is rising into a large potential resistance zone highlighted by the head and shoulders topping pattern. But it also advancing from a higher swing low near the lower end of a large rising parallel trend channel. The recent swing low established a higher slope for the trend, marked by a rising dashed line. A reversal from the lows of the channel suggests the possibility of an eventual advance to the top channel line.

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