Natural Gas Forecast: Bullish Momentum Builds, Potential for Higher Prices

Natural Gas Forecast Video for 07.06.23 by Bruce Powers

Once again natural gas tests support as it trades below Monday’s low before quickly finding support at 2.17. It subsequently rallied later in the session and is on track to close with a daily bullish hammer candlestick pattern. Resistance is at the 34-Day EMA, now at 2.31, and Monday’s high of 2.32.

A Daily Close Above 2.32 Shows Strength

A daily close above 2.32 will show strength and open the possibility for higher prices. There have been a number of times in the past six weeks or so that the 34-Day line was daily support or resistance. Although it is not assured, the potential exists for demand to increase once natural gas closes above last week’s high. At that point it will also be above both the 34-Day line and short downtrend line. This doesn’t mean that natural gas goes straight up from there as there could be more backing and filling and testing of the uptrend line. Last week’s test of the line indicates that it should be support again in the future, and once it is not a warning has occurred.

Markets Like Threes

So far, there have been two rallies off the 1.95 trend low from April 14. Markets like to do things in threes. The expectation is that a third rally is coming as long as last week’s low is not exceeded to the downside first. Last month’s rally ended at a high of 2.69, which was above the prior swing high. That high also completed a 127.2% extension of the previous decline at 2.66. We can then estimate that the current rally, if it is to continue, matches the relationship of the prior upswing to its previous decline at 2.83. We can then expand the red highlighted target zone to include the 2.83 target.

Higher Target Zone of 2.77 to 2.83

This means that once the 2.69 swing high is exceeded to the upside with a daily close above it, the next key target zone is from 2.77 to 2.83. Both the last rally and the one prior lasted 10 days. Might the current rally last at least 10 days? We will have to see but there is a good chance it will. If the pattern of reaching the 127.2% Fibonacci extension is to happen again, then upward momentum in natural gas will likely accelerate soon.

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