Natural Gas Price Forecast: Gas Rebounds, Targets Breakout Above $3.84

Natural gas triggered a bullish reversal on Monday as it broke out above a four-day of $3.66 before hitting a high of $3.76 for the day. However, trading continues near the highs of the day at the time of this writing, and therefore the price of natural gas may go higher before today’s close. Nonetheless, it looks likely that the day will end with a bullish hammer candlestick pattern, which shows bullish momentum. Today’s advance initially triggered an upside breakout of an inside day from Friday, which provided an initial daily breakout signal.

Bullish Reversal Points to $3.84

Today’s advance shows the likely completion of a bottom with a slightly higher swing low established at $3.45. Support was confirmed around the price level by the confluence of the 50-Day MA, the 20-Day MA, a 50% retracement level, and a significant anchored volume weighted average price (AVWAP) support level calculated from the swing low in April. Recently, the 20-Day MA began to rise again and moved away from the 50-Day MA. That dynamic between the two moving averages is a sign of improving underlying demand.

Upside Breakout Possible

There were essentially three attempts following the April swing low to reclaim the $3.84 price level. Resistance was seen at $3.84, which established a swing high. Two subsequent rallies stopped short at $3.83 and $3.82, respectively. Monday’s advance shows another likely attempt will be made. Notice that the 50-Day MA (orange) was last reclaimed on June 2. Therefore, the recent pullback was a successful test of prior dynamic resistance as support. Since it was followed by a bullish reversal, the bearish correction should be complete, with a new attempt to rise above $3.84 likely to be seen next.

Above $3.82 Needed Next

A rally above today’s high of $3.76 will provide the next sign of strength but an advance above the most recent lower swing high of $3.82 will give a more reliable indication. If the $3.84 level is broken a continuation of the rising ABCD pattern will be triggered and increase the chance of eventually reaching the initial target from the pattern at $4.08. That price level can be considered as potential resistance along with the 61.85% Fibonacci retracement level at $4.12.

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