Natural Gas Price Forecast: Trendline Recovery Supports Bullish Bounce

Daily Breakout Confirms Trendline Strength

Natural gas extended gains to a high of $3.29 on Thursday, triggering a breakout above Wednesday’s high of $3.23. A long-term rising trendline has been shown as a key near-term indicator for strength or weakness recently. There was a break below the line in mid-February, resulting in a bearish trend reversal signal below the swing low at $3.01 from January. Since then, the first daily close above the line occurred on Wednesday and today marks the second daily confirmation of strength indicated by the recovery of the trendline.

Resistance Levels Form Ahead

That is a small indication of strength, and it may quickly be negated with further selling. What it does suggest however is that higher price levels may be tested as resistance in the current bounce. The obvious and next significant level is Monday’s high of $3.49. That is also a weekly high and it shows resistance right at the 10-week moving average. It is also near the 50-day moving average resistance line at $3.52, and the 200-day moving average at $3.56. This week’s high sets the stage for a potential resistance zone extending to the lower swing high and top of a falling wedge at $3.66.

Momentum and Pullback Analysis

Momentum following a breakout of a falling bullish wedge pattern a couple weeks ago was initially sluggish until Monday’s spike to a 19-day high of $3.49. Nonetheless, that advance quickly dissolved as sellers took control, driving price to a close near the low of the day. The pullback found support near the 10-day and 20-day moving averages, which show constructive progression of the advance from the trend low at $2.76 from February.

Weekly Confirmation Supports Trend Continuation

The weekly chart shows two weeks of higher highs and higher lows. A weekly breakout confirmation signal will occur if this week ends above last week’s high of $3.28. The 10-week moving average has just turned up for the first time since November and provides another small bullish sign. This suggests that the recovery from the February trend low at $2.76 may continue to test the multiple resistance levels identified in the first paragraph, connecting the daily and weekly perspectives for a clearer trading outlook.

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