Natural Gas Price Forecast: Potential for Bullish Momentum Builds

Bruce Powers
Published: Apr 23, 2024, 20:07 GMT+00:00

Natural gas remains stuck in a symmetrical triangle consolidation pattern, starting to break out above last week's high.

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Natural gas has begun to break out above last week’s high of 1.806 as it again tests that price area as resistance with Tuesday’s high of 1.808. At the time of this writing, it is on track to end the session with a bullish continuation hammer candlestick pattern. Moreover, notice that the blue 8-Day MA was successfully tested today as support with the day’s low of 1.745. It is the first time in nine days that the 8-Day line has represented support, and it shows improving demand for natural gas, although still a minor change.

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Watch for Weekly Breakout

A decisive rally above today’s high will trigger a bullish continuation of the advance that began from the most recent swing low at 1.64. That low tested support around the bottom of a symmetrical triangle consolidation pattern. Once support is seen at the bottom of a triangle and it turns up, a continuation towards the top boundary line of the pattern to test resistance is most likely. Also, since the triangle is well formed, with four points creating the boundaries of the pattern, a breakout can happen from the current advance.

Next Target is Top of Triangle

Resistance may not halt the advance at the top boundary line and instead a breakout could occur. However, keep in mind that upward momentum is essentially beginning from the recent swing low. So, even if the top line is broken there may not be enough demand on the sidelines to keep prices rising in the short term. An alternative bullish scenario would be to see signs of resistance around the top line on the initial approach. And that resistance leads to either consolidation or a pullback as natural gas sets up for a new entry that leads to a decisive upside breakout.

The short-term bearish scenario would see resistance around the top boundary line, leading to a retracement that takes natural gas back down to test support around the lower boundary line. That scenario increases the chance for a bearish breakdown from the triangle pattern.

Weekly Pattern is Bullish

As discussed in Monday’s article on natural gas, the weekly chart pattern shows a breakdown of a bearish shooting star candle last week, followed by a bullish breakout of a hammer candlestick this week. In other words, the market on a weekly basis gave a clear bearish signal, and then flipped around the gave a clear bullish signal. This type of flip from bear to bull in a short period of time is what can lead to sharp moves. In this case up. Certainly, there are no signs of it yet, however.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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