Natural Gas Soars, Bulls Take Charge with Higher Targets in View

Natural Gas Forecast Video for 16.06.23 by Bruce Powers

A strong rally in natural gas today puts the bears on notice as it heads towards 2.77. It is on track to close at a three-week daily closing high and possibly a four-week high. The four-week high is at 2.57. Today’s high completed a 78.6% Fibonacci retracement. Further signs of strength are needed to increase the chance for a continuation of the rising trend channel.

Strong Weekly Close Ahead

If natural gas can complete the week in the top portion of this week’s range, it will be the second highest weekly close since March 3. That would be a sure sign of strength in support of still higher prices.

Evidence Support Next Major Target Zone

The target zone highlighted in red, from 2.77 to 2.83, shows the confluence of a number of targets using a variety of methods. This strengthens the likelihood of the target zone being reached as several indications on their own would be enough to identify a solid upside target. Today’s wide range green candle shows enthusiasm returning to natural gas. Nonetheless, it remains to be seen if such signs of strength over only one day can extend.

Higher Target Zone Supported by Measured Move

Following a breakout above 2.83, natural gas will be heading towards the second target zone from 2.97 to 3.03. A measured move (2) completes at 3.01. That’s where the advance off the second trend low (2) matches the rise from the first trend low (1) on a percentage basis. The swing high from early-March is at 3.03. Further supporting the identification of that potential resistance zone is the confluence of several Fibonacci levels.

Preparing for Monthly Breakout

June is the fifth month that natural gas has been range-bound near lows of the downtrend. If current strength is maintained if not exceeded, natural gas will end the month at its highest monthly close in five months. That would be good for the bulls as the possibility of a monthly breakout on a move above May’s high of 2.69 will provide a long-term bullish signal. Upward momentum could pick up at that point given the long-term nature of the signal. However, a monthly signal can still take some time to follow-through and the possibility of a retracement prior to a continuation of the advance is not uncommon.

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