Natural Gas Price Forecast: Bullish Wedge Break Signals Upside

Bullish Breakout Triggers Key Test

Natural gas triggered a bullish breakout of a falling wedge pattern on Tuesday, followed by a test of resistance near the 20-day moving average and long-term uptrend line. It briefly reclaimed the 20-day average, reaching an intraday high of $3.19. The breakout triggered above the top downtrend line of the small wedge and above Monday’s high of $3.07. Typical bullish behavior was evident, as Tuesday’s higher daily low of $2.97 rebounded from support near the 10-day moving average.

Moreover, this marks the first day with a full range above the 10-day line since it failed as support in late-January. A daily close above Monday’s high will confirm the upside breakout, while a drop below Tuesday’s low will show weakness rather than strength following the potentially bullish breakout.

Resistance Recognition and Recovery Signals

The market has recognized resistance near the uptrend line and 20-day moving average, validating those levels as key pivot areas. Therefore, a decisive recovery of both lines should lead to further strengthening. It would begin to negate the bearish implications of the failure of the long-term uptrend line as support. A daily close above the 20-day line will confirm the recovery and further validate the wedge breakout.

Trend Channel and Swing High Targets

Such a move would place natural gas back inside a large rising trend channel, with the potential to eventually head towards the middle of the channel, as an initial general target zone. However, the next price levels to watch for a recovery are the lower swing highs at $3.25 and $3.32, which were integral to the construction of the wedge pattern. The more significant lower swing high level is at $3.66, because it is associated with potential resistance near the 200-day moving average at $3.57.

Fibonacci Retracements Define Longer-Term Upside

However, before the middle channel line is reached there is a key upside target zone near $4.56-$4.59, consisting of a 38.2% Fibonacci retracement of the recent downswing and an interim swing high from December, respectively. If that price zone is surpassed then the 50% retracement at $5.11 becomes a target, up to the November peak of $5.50.

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