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Natural Gas Price Surge: 200-Day EMA Test Points to Upside

By:
Bruce Powers

A potential breakout above the 200-Day EMA suggests a bullish trend for natural gas, with target zones in sight.

Natural Gas tank, FX Empire

In this article:

Natural Gas Forecast Video for 27.10.23 by Bruce Powers

Natural gas spikes higher on Thursday to test the 200-Day EMA as resistance along with the 50% retracement. The high for the day of 3.19 (at time of this writing) briefly exceeded the 200-Day EMA at 3.17, an important trend indicator. Further, a bullish weekly signal triggered on today’s rally, which exceeded last week’s high of 3.185.

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Natural Gas Shows Strength

As we head into the final hours of Thursday’s session buyers continue to dominate with trading occurring near the highs of the day. The 200-Day line has stalled the advance but has not reversed price to the downside. This behavior along with today’s strong rally seems to indicate it wants to breakout above the 200-Day line and advance further.

Retracement Indicated on Drop Below Today’s Low

Nevertheless, if a retracement occurs first, the internal uptrend line may be tested as support. If it holds a decline, the bullish outlook remains. Otherwise, a retracement to test support again around the 50-Day EMA, currently at 2.90.

Daily Close Above 200-Day EMA Confirms Upside Breakout

A daily close above the 200 Day EMA will be bullish and confirm a second breakout of the 200-Day line. The first occurred on October 6. Notice that, like today, the day before the first breakout natural gas had a strong one-day rally that closed just below resistance of the 200-Day EMA. It was followed by another strong one-day rally on the breakout day that closed strong, away from the 200-Day line.

First Targets Recent High of 3.47

After a confirmed breakout of the 200-Day line, natural gas heads to the recent trend high of 3.47 and will likely continue higher. Once natural gas closes above the 200-Day line for a second time after being below it since December 19, 2022, the uptrend has a chance to further strengthen. Today’s clear advance off support of the 50-Day EMA indicates that buyers may be starting to get more aggressive. Notice that there is a new angle of ascent represented by the internal downtrend line touching the October 23 swing low. This reflects improving upward momentum.

The breakout of the 200-Day line and then holding above it will be a very bullish sign for natural gas. Following a rise above the 3.47 swing high, the analysis indicates two target zones. The first is from 3.58 to 3.38 and the second is from 3.78 to 3.85.

For a look at all of today’s economic events, check out our economic calendar.

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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