Natural Gas Price Forecast: Bullish Reversal Targets $3.21

Bullish Reversal Tests Moving-Average Support

Natural gas triggered a two-day bullish reversal signal on Monday with a rally above a two-day high of $2.85, reaching a high for the session at $2.91 before seeing signs of resistance. That high was followed by selling and at the time of writing, natural gas is on track to close in the lower half of the day’s range with a higher daily low of $2.85 and a test of support at both the 20-day and 50-day moving averages. Both those trend indicators were reclaimed during Monday’s advance, since they marked the same price zone on the breakout day.

Channel Reversal Opens Upside Targets

Monday’s advance signals a bullish reversal from the lower boundary of a rising channel. This suggests an eventual upside target near the upper boundary of the pattern, thereby supporting the potential for initial targets to be reached, at a minimum. The recent swing high of $3.03 is the next target for natural gas, followed by the 61.8% retracement of the prior decline at $3.09. There is also the higher 78.6% Fibonacci retracement target at $3.21.

Friday’s Range Remains a Risk Zone

Although Monday’s low is short-term support, since Monday’s full range is above the $2.85 high, a pullback into Friday’s range from $2.91 to $2.77 may yet occur but that shouldn’t change the short-term bullish outlook unless Friday’s low breaks to the downside. The fact that both Friday and Thursday fell below the lower rising channel line intraday, but the close was at or above the line, is bullish behavior that has now confirmed with Monday’s breakout.

Moving-Average Confluence Raises Stakes

Keep in mind the significance of the timing shown today, with the two moving averages aligning near Friday’s high on the day of the breakout. This adds to the significance of the breakout and therefore the potential for strength to resume towards higher prices. Consequently, it will also add significance to a failure of the bullish signal on a decline below $2.75.

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