Natural Gas Price Forecast: Shows Strength on Reclaim of 200-Day MA

Natural gas continued its counter-trend rally on Monday, reaching a six-day high of $3.50, as it reclaimed the 200-Day MA. A higher daily high and higher low was established at $3.50 and $3.38, respectively, for the third day in a row. The breakout above the 200-Day line is another sign of short-term strength and it provides additional evidence that the buyers remain in charge, at least for the short-term. Most trading activity in the past five days occurred below the 200-Day line. That could change today.

Short-term Strength

At the time of this writing, natural gas is trading in the top third of the day’s range and it looks likely to end the trading session in a similar bullish position. That would confirm the 200-MA breakout, as well as a bullish reversal from support around a rising trendline. A higher swing low of $3.15 was established following the completion of a 78.6% Fibonacci retracement. However, additional bullish signs are needed before a sustainable reversal may be in place. An advance above an interim swing high at $3.57 is needed for a bullish reversal signal based on price structure. That was the most recent swing high. Until then, it would not be surprising to see additional tests of support around the trendline.

20-Day Line Resistance Range

Areas to watch for potential resistance above today’s high are around a cluster of three potential resistance lines from $3.53 to $3.55. That top level is the 20-Day MA, and the 50-Day MA is between the two lines at $3.54 currently. The beginning of that range is an AVWAP level starting from the April swing lows. Also, note that going straight up today on the chart shows the dashed trendline that was part of a rising channel. It was previously an area of trend support, and now it is in a position to be tested as resistance. If the $3.57 swing high can be reclaimed, then the more significant lower swing high at $3.75 is the next higher target zone. A decisive breakout above that level will provide another bullish reversal signal.

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