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Natural Gas Price Forecast: Signs of Strength Despite Pullback

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Natural gas hit a high of 1.79 on Wednesday before encountering resistance. Today, a pullback from that high is in full swing as yesterday’s low of 1.68 was exceeded to the downside and support around the 8-Day MA was tested. The low of the day at the time of this writing is 1.66 and the 8-Day line is at 1.675. Where natural gas closes may provide further clues as to what might come next. For example, a daily close above the 8-Day MA will indicate greater strength than a close below it. Currently, natural gas is on track to close weak, in the lower 33% of the day’s trading range.

Daily Support Seen at 8-Day Moving Average

On Tuesday, the 8-Day line acted as resistance and today it shows support. If the 8-Day line continues to stop the decline it could lead to a bullish reversal and upside continuation of the rally that began from this week’s low of 1.52. That low was a key support level back in 2020. Yesterday’s high of 1.79 tested resistance from the September 2020 swing low (support becomes resistance). This means that the market is recognizing the level, as well as the 8-Day MA (so far). Therefore, it may do so again.

Breakout Above 1.79 Targets 1.94, Plus

As noted above, price action of the past couple of days provides a short-term support level at today’s low of 1.66, and resistance at yesterday’s high of 1.79. A breakout through one of those price levels will help determine the next direction, although a bias to the upside seems to be building. An upside breakout above 1.79 triggers a bullish continuation of the developing uptrend. Subsequently, natural gas should head towards the next potential resistance zone from around 1.94 to 2.04. That price range was previously support for the downtrend for almost a full year. In addition, the 38.2% Fibonacci retracement level at 2.04 is included in the zone since it is so close.

Further, the 20-Day MA is included in the price zone at 1.95. Notice that the 20-Day MA and the downtrend line have been marking a similar price area for almost a month. If natural gas can eventually close above the 20-Day line and the prior trend low of 1.94, it will start to have a real chance of further strengthening.

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This article was originally posted on FX Empire

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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