Natural Gas Price Forecast: Faces Resistance from Where it May Breakout or Retrace

Natural gas consolidates near highs with an inside day today, Wednesday. It continues to show strength as it has been testing a key near-term resistance zone for the past several days. The price zone ranges from around 1.95 to 2.01. It includes the long-term downtrend line and prior trend lows from February and April 2023. Two Fibonacci levels mark the next higher potential resistance zone from 2.02 to 2.04. What this indicates is that a breakout above 2.01 may quickly hit another zone of resistance. Moreover, natural gas may break right through the Fibonacci price zone and continue higher.

Watching for Further Signs of Strength

A sign of weakness is shown in the recent daily closing prices as there has yet been a decisive close above the low of the first zone at 1.95 or the downtrend line. If that happens, it will further confirm the strength indicated by the rally so far. What happens next though will be important. A daily close above 1.95 by itself is not a reliable signal. But once there is a decisive daily close above 2.01 the chance for a continuation higher improves slightly, and then more so on a move above 2.04.

8-Day Moving Average Provides Dynamic Support

The 8-Day MA crossed above the 20-Day MA reflecting strength in the current advance. It will also mark key dynamic support level for the rally. It is currently at 1.85. A drop to test support of the 8-Day line becomes more likely if there is a drop below today’s low of 1.92. However, a drop below the two-day low at 1.89 is going to provide a clearer sign of short-term weakness. Other price levels to watch for possible support if a pullback from this week’s high occurs is the prior swing high at 1.92 (B) and the 20-Day MA at 1.78.

Remains in Long-term Downtrend

Although we have seen short-term strength recently in natural gas it remains in a long-term downtrend. Rallies can be expected to encounter resistance around prior key price levels. The dominant downtrend may again exert its control over price action leading to either an eventual continuation of the downtrend or at least further tests of support levels.

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