Bullish Momentum: Natural Gas Eyes Higher Targets Following Bullish Reversal

Natural Gas Forecast Video for 18.12.23 by Bruce Powers

Natural gas continued its bullish advance today with a higher daily low and higher high. A five-day high of 2.54 was reached before encountering intraday resistance. That high matches the prior swing low from September 26. A close today above the five-day high of 2.49 will indicate slightly more strength than a close below it.

Weekly Bullish Doji Hammer Candlestick Pattern

Natural gas is on track to end the week with a bullish doji hammer candlestick pattern. Therefore, a decisive breakout above this week’s high of 2.54 will provide a new bullish signal. If sustained, natural gas would then be heading higher towards the 20-Day MA (purple) at 2.68, followed by the 38.2% Fibonacci retracement at 2.77. There is also a weekly high at 2.79.

However, a key resistance zone is up around 2.88. You can see how the uptrend line and 20-Day MA cross in that price zone. Moreover, it was recognized multiple times in past months as either support or resistance (arrows). It remains to be seen whether natural will test that higher target zone, but if it does there is a strong chance of seeing resistance there. Additional signs of strength after today will leave clues.

Possibility of Another Test of Lows is a Risk

Nevertheless, a test of the lows may occur as well prior to a rally up to higher price levels. A decline below today’s low indicates weakening and may lead to a test of recent lows. The trend low is at 2.235, which completed a 78.6% Fibonacci retracement and almost hit the 161.8% extended target for the falling ABCD pattern. The degree of the retracement and subsequent bullish reaction suggests that the low is probably set for now.

Rally Beginning Toward Breakdown of Bear Flag around 2.88

Natural gas broke down from a large bearish flag in late November and eventually accelerated the decline as aggressive selling kicked in. As with all pattern breakouts, a reversal to test prior support as resistance develops. This doesn’t mean the rally in natural gas goes back to the lower rising trendline area, but that potential exists. In general, the expectation for a breakdown of a bearish flag is eventual new lows, below the 1.95 trend low from April. However, patterns don’t always follow through as expected and they also tend to morph into other patterns.

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