Natural Gas Price Forecast: Bullish Turn Targets $3.09

Bullish Reversal Gains Confirmation

Natural gas extended gains on Tuesday, following Monday’s trigger of a two-day bullish reversal signal above Friday’s high of $2.85 that triggered on Monday. A higher daily high of $2.95 and higher low of $2.87 were established. The low for the day marked the second successful test of support near both the 20-day and 50-day moving averages, currently near $2.86 and $2.85, respectively.

Improving bullish momentum was also signaled by the 20-day moving average moving above the 50-day moving average. The combination of strengthening price action and improving moving-average momentum provides additional confirmation that the turn higher may have further room to develop.

Channel Structure Opens Higher Targets

This bullish price action further validates the turn higher on Monday from a key support zone near the lower boundary of a rising trend channel. When there is a reversal from one side of a channel, the opposite side becomes a potential target. For natural gas, if the integrity of the channel is maintained, an eventual test of resistance near the 78.6% Fibonacci retracement at $4.21 could occur as the advance develops within the boundaries of the channel. While that is a much higher target, the current price structure suggests that the first challenge will come considerably sooner.

Nevertheless, the potential to test resistance at the 61.8% Fibonacci retracement at $3.09 becomes increasingly relevant. First though is the recent high of $3.01 that presents the next upside target. If the higher targets are to continue to be valid, support near the lower swing high of $2.83 should continue to hold. In addition, both the 20-day and 50-day moving averages are key short-term support indicators. A sustained move above $3.01 would therefore strengthen the bullish setup and open the way toward the $3.09 target.

Weekly Consolidation Could Bring Confirmation

On the weekly chart, natural gas looks likely to complete an inside week this week, with the low-to-high range remaining contained within last week’s range. This shows consolidation on that timeframe. Therefore, a breakout through either the high or the low has the potential to trigger continuation in the direction of the breakout.

Although it is too early in the week for those levels to matter, they will have more significance if the week ends with natural gas in a similar position. For now, the daily chart is showing improving momentum and rising support, while the weekly consolidation could provide the next confirmation of whether the bullish turn can continue.

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