Natural Gas Price Forecast: Rebounds to Four-day High

Natural gas turned up on Tuesday, triggering a three-day breakout to a high of $3.19. This shows support from Monday’s low of $2.98. That was slightly above a long-term anchored volume weighted average price (AVWAP) line at $2.96 and long-term uptrend line.

Notice that the lines converged on the same day support was seen at $2.98, which was directly above the convergence of the two lines. A reclaim of the prior trend low of $3.06 today provided another sign of strength but the daily closing price should give clues as to whether buyers are stepping into the market.

Bullish Reversal Signaled

A daily close above Monday’s high of $3.14 will confirm a one-day bullish reversal, while a closing price above Thursday’s high of $3.17 confirms a stronger a three-day reversal. That could establish a sustainable bottom and a higher swing low. Nonetheless, it wouldn’t be surprising to see additional tests of support within a range down to the $2.98 low. The trendline that represents dynamic support for the uptrend will represent a higher price point moving forward.

So, that might indicate support during pullbacks should be seen above Monday’s low as the trendline will be reached before that low. Tuesday’s low of $3.10 is support and a drop below that level could lead to another test of support around the prior trend low of $3.06, or a long-term pivot (dashed), also around $3.10.

20-Day Line Resistance

The initial upside target for natural gas looks to be around the 20-Day MA, now at $3.33. Above there is possible resistance around the 200-Day MA, currently at $3.46. Those two levels can provide a guide if higher prices are approached. If natural gas continues to trade below the 200-Day line, it will face downward pressure. At the same time, a sustained bullish reversal from both support of the long-term trendline and long-term AVWAP support line, is bullish and confirms the integrity of the long-term uptrend.

Below $2.98 Turns Bearish

Regardless of the potential for continued strength, a drop below Monday’s low of $2.98 could see a decline below the AVWAP line. This would likely lead to a test of support around the swing low of $2.86. A little lower is a 78.6% retracement level at $2.79.

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