Natural Gas Price Forecast: Bullish Momentum Remains as Resistance Tested

Natural gas showed sustained strength on Wednesday with another test of resistance around $3.58. At the time of this writing, it continues to trade near the highs of the day. So far, the high of the day at the time of this writing was $3.58 and the low $3.47.

There was a slight rise above Tuesday’s high of less than $0.01 today and natural gas is on track to end the day above the 50-Day MA (orange) for the first time since January 27. It is also interesting to note that the 20-Day MA (purple) has now converged with the previously discussed price level of $3.58, the high for Tuesday.

Daily Close Above 50-Day Line is Bullish

A daily close above the 50-Day line is bullish and may provide a clue that indicates further underlying strength in the price of natural gas. Also, the 38.2% Fibonacci retracement level at $3.51 was exceeded for the second time today and a strong close above that price level looks likely. However, today’s rise was the first test of resistance around the 20-Day MA since the drop below it on January 27. Resistance has been seen but whether it can be sustained remains to be seen. Given the signs of underlying strength, a reclaim of the 20-Day MA may be possible before a pullback.

Reclaim of 20-Day Line Would Show Further Strength

If the 20-Day MA can be reclaimed, the next higher target zone is from around $3.64 to $3.69. That price zone consists of the prior swing high and peak for 2023 at $3.64, a 50% retracement level at $3.67, and a 127.2% extended target for a small rising ABCD pattern (not shown). The initial target for the ABCD pattern was completed at $3.58.

Now that the 20-Day line has fallen to converge with the $3.58, the $3.58 price zone takes on greater potential significance. Since a breakout above the 2023 high of $3.64 provided a new bullish trend reversal signal for the long-term trend in late-December, it is a key price level. A rise above it would be bullish, and especially a daily close above it.

Last week’s price range and likely this week as well are within the price range from two weeks ago from $2.99 to $3.83. Since the low end of the price range was tested as support with last week’s low, an upswing to test resistance near the week’s high could be in process.

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