Natural Gas Price Forecast: Bullish Reversal Tests Resistance

Intraday Shift Toward Buyer Control

Indications of upward pressure in the price of natural gas emerged on Tuesday, with a bullish engulfing candlestick pattern poised to complete. The session began with slightly lower daily low of $3.16 that successfully tested support near the uptrend line. That decline attracted buyers, resulting in an intraday rally above Monday’s high of $3.31. A one-day bullish reversal signal will be confirmed with a close above Monday’s high. Nonetheless, the session appears likely to finish in the upper third of the day’s range, reflecting underlying buying strength.

Momentum Build Within the Session

In addition, Tuesday’s strength puts natural gas in a position to possibly end the session at its second highest daily closing price of the current bull trend. That would be a sign of strength showing buyers continue to remain in control. Therefore, an upside breakout from the recent consolidation range remains a possibility. Nevertheless, the bullish engulfing pattern alone provides an encouraging early indication of improving demand. It remains to seen whether that can be sustained.

Resistance Barrier at the 200-Day Moving Average

As discussed previously, there is a potentially significant resistance zone near recent highs, capped by the 200-day moving average near $3.44. The indicator was confirmed as resistance during the advance with a high of $3.40, which also marked the high of the uptrend that started from the April low. If that resistance zone is surpassed, the lower swing high of $3.49 becomes the next upside target area. Notably, a recovery above that swing high would provide a bullish trend reversal signal.

Higher Swing Low Forms

Tuesday’s low establishes a new higher swing low at $3.16, as part of the bullish trend structure. It is now a key trend structure support level. If it breaks, the interim swing low near $3.12 becomes a target followed by the June swing low at $3.02. In addition, key dynamic support is provided by the rising 50-day moving average, currently near $3.00.

Outlook: Breakout or Rejection Ahead

Taken together, the successful defense of the uptrend line and emergence of the bullish engulfing pattern reinforce the improving tone noted above. Whether buyers can now overcome resistance near the 200-day moving average will likely determine if the current recovery develops into a broader upside breakout.

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