Natural Gas Price Forecast: Surges to New High, Eyes $3.00

Bruce Powers
Published: May 20, 2024, 20:27 GMT+00:00

Natural gas surged to a new high of 2.75, breaking resistance and setting sights on the 2.99-3.00 target zone.

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Natural gas further advances to a new trend high of 2.75 on Monday, as it busts through a potential resistance zone ending at 2.69. Today’s high put the price of natural gas up by 73.5% from the most recent swing low at 1.58 (C). It looks like it will close strong today, in the top quarter of the day’s range and above 2.69. That puts it in a good position to continue its ascent towards the 78.6% Fibonacci retracement target at 2.99.

Also, the area around the top declining blue dash channel line can be watched for signs of resistance. For those familiar with Gann’s square of nine calculator, a 270 degree rise from the 1.58 low completes at 3.00. That is a match with the 78.6% price target and tells us to keep a close eye on the approach towards the 2.99/3.00 price zone.

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Interim Higher Price Targets from ABCD Pattern

Nevertheless, there is no assurance the higher targets will be reached. Interim price targets include 2.80 and 2.86. They are derived from the 2.5% and 261.8% extensions of the rising ABCD pattern, respectively. Another price level of 2.88 is marked from the June 2023 swing high. Although all previous potential targets from the rising ABCD pattern have been exceeded during the current rally, a top in natural gas will be found at some point, and it may match with an ABCD target.

The ABCD pattern looks to identify price symmetry between the second CD leg of the advance and the initial AB leg. Symmetry first occurs when the price appreciation in each advance matches. Subsequently, Fibonacci ratios are used to identify extended targets for the CD leg. For example, for the 261.8% target, the price distance of the AB leg is multiplied by the Fibonacci ratio to derive a target of 2.86.

Relative Strength of Current Rally

The current rally of 73.5% is well above the prior two greatest advances since the first bottom of the downtrend in February 2023. There were four prior larger rallies from 34.7% to 53.9%. The current advance of 73.5% clearly exceeds the previous rallies. This points to a likely change in character as natural gas further shows strength and provides signs of a transition from a downtrend to an uptrend, in which case the 3.00 price zone becomes more likely to be reached.

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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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