Natural Gas Price Forecast: Bullish Reversal to $4.46 – 20-Day Resistance Looms

Tuesday’s Bullish Spike

Natural gas spiked through a resistance zone, confirming a bullish reversal to an eight-day high of $4.46 and rising. It remains poised to settle near the highs of the day. The advance reclaimed both the 10-day and 20-day moving averages, which happened to be identifying a similar price level on Tuesday and Monday. Support had been tested for five days near the 61.8% Fibonacci retracement with a trend low at $3.80 hit on Monday. This leads to an outside week for natural gas. Given today’s bullish reversal, that low is now a higher swing low. Possibly, it will lead to a new leg up bounded by a new rising trendline.

50-Day as Critical Support

The reaction of price near the 50-day average on a pullback should provide additional clues regarding the strength of demand. It had acted as an area of resistance for the prior five days. Now at $4.17, it should mark an area of support if Tuesday’s strength is to be sustained. A valid breakdown attempt of the 50-day average has failed, marking it as a potentially more significant support area and giving weight to the higher swing low. This behavior seems to favour the bulls before there is another challenge to the new higher swing low.

Immediate Upside Targets

Nonetheless, the first upside target is fast approaching near the 20-day average, now at $4.50. This bounce is the first pullback to the 20-day line since it was broken as support on December 9. Above that line is another price area to help gauge demand. It runs from the next daily high of $4.63 and up to the early-November resistance range at $4.69. A daily close above the 20-day average will be needed to confirm strength of the current advance and the potential it has.

Average Convergence Dynamics

Since the 20-day line is falling and the 50-day average is rising, the distance between the two will continue to narrow. Those indicators will continue to define key price parameters if consolidation follows a touch of the 20-day line.

Monthly Context

Since the month is almost over, it looks likely that natural gas will end down for the month and below November’s high of $4.87. This would suggest continued downward pressure in natural gas, even though short-term advances remain likely as well.

Outlook

Natural gas has flipped short-term momentum with the failed 50-day breakdown and strong reclaim of the 10-day/20-day averages off the higher $3.80 low. Clearance and hold above the 20-day $4.50 targets $4.63–$4.69; respect of the 50-day on pullbacks keeps the reversal case alive, while monthly weakness caps enthusiasm until proven otherwise.

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