Natural Gas Price Forecast: Shows Bullish Outside Week, Support Holds

Bullish Outside Week Suggests Higher Swing Low

Natural gas is on track to complete a bullish outside week after this week’s high of $4.49. This suggests that Monday’s weekly low of $3.80 has a good chance of remaining support and therefore a higher swing low. The wide range of the outside week opens the possibility of continued short-term volatility within the week’s wide price range. If the higher swing low is to be sustained, then there could be further testing of support.

200-Week Moving Average Becomes Key Support

Given the Christmas holiday, the weekly chart is presented today. One thing of interest is the reaction of the price at the 200-week moving average. That line was an area of resistance at the June swing high and now is showing signs of support – and on the stronger weekly timeframe. It is interesting to note that the 200-week average at $3.78 aligns closely with support indicated by the 50-month average. Once prior resistance becomes support, the trend may be ready to proceed. For gold, this refers to the countertrend bounce that triggered on Tuesday with a bullish reversal confirmed by an eight-day closing high.

Fibonacci Levels Highlight Potential Upside Targets

With a bullish outside week off support at the 200-week average and a 61.8% Fibonacci retracement level, natural gas is suggesting it wants to further explore the price imbalances reflected in the sharp one-week decline following the recent multi-year high of $5.50 only three weeks ago. That daily high ended way up at $5.21. Even though that level may not be reached, it increases the chance that the lower 61.8% Fibonacci retracement at $4.85 is. Especially, since it aligns with a daily high a $4.87 and the March swing high at $4.90.

Wedge Breakout and Confluence Indicators Confirm Support

Another way to look at the larger pattern for natural gas is that it broke out of a falling bullish wedge in late-October. This week’s low either ends the first pullback after the wedge breakout or leads to a deeper retracement to test lower support areas. Specifically, the 50-week average is at $3.64 and joined by a prior interim swing high at $3.56. That is also very close to a long-term uptrend line and the top of a trend channel. Together, the confluence of indicators shows the potential for this week’s support to hold.

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