Natural Gas Price Forecast: Bullish Reversal Sets Stage for Upside Targets

A sharp bullish one-day reversal triggered on Tuesday with a decisive rally above Monday’s high of $3.27. The high for the day was $3.45 and the low $3.11. That high tested resistance around the convergence of two anchored volume weighed average price (AVWAP) lines (light blue). One was anchored to the recent swing high and the other the April swing low.

In addition, the 20-Day MA was also nearby and is currently at $3.41. At the time of this writing natural gas is trading in the top third of the day’s trading range and it looks set to close in a similar bullish position. Nonetheless, before there are indications that it may go higher, a daily close above the 20-Day line needs to be seen.

Rise off Strong Support

The bullish reversal seen today established a higher swing low around potential dynamic support of the 200-Day MA, now at $3.19, and the 78.6% Fibonacci retracement at $3.07. In addition, natural gas is on track to close above the downtrend line drawn from the recent trend high of $4.90, after closing below the line yesterday. The two key price levels are last week’s high of $3.10 for support and the most recent lower swing high from last week at $3.84.

Higher Swing Low Established

With a recent swing low, natural gas prices are likely to rise. A new higher swing low establishes a potential rising ABCD pattern. The initial target for that pattern is up at $4.08. That is where the two upswings of the pattern will match and therefore it identifies a potential resistance level. Since the 61.8% Fibonacci retracement of the full decline from the March high is at $4.12, together with ABCD target, generates a potential resistance zone from around $4.08 to $4.12.

Close Above 20-Day MA, Lead to 50-Day MA

Below the recent swing high is potential resistance of the 50-Day MA, now at $3.63. Once the 20-Day line is reclaimed, the 50-Day line becomes the next upside target. A sustained breakout above the 50-Day MA puts the recent interim swing high of $3.84 in sight and a rally above that level will confirm a continuation of the advance from the April swing low.

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