Oil & Gas - Energy - Commodities - Resources (OILBRENT)

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Natural Gas Price Forecast: Potential for Further Upside
By: Bruce Powers | February 21, 2024

• Natural gas saw a bullish reversal, rallying above last Friday’s high, signaling potential for further upside.

A bullish reversal in natural gas finally triggered late Tuesday on a rally above last Friday’s 1.64 high. Natural gas closed strong, near the highs of the day. The bulls remained in control on Wednesday, driving a rally up to test resistance with a high of 1.79. That price level was previously support at the spike low from September 2020. Since the market is recognizing a previously identified price resistance level, higher price levels may also be recognized by the market.



A Rally Above 1.79 Targets 1.95

Following an advance above today high, the next potential resistance zone is near prior support of the long-term downtrend. It starts from 1.95 and goes up to 1.97. Moreover, the 38.2% Fibonacci retracement is slightly higher than that range at 2.04. Following an advance above 2.04 natural gas heads up into a large consolidation range that includes several key price levels that may stand out. First, there is the high from the gap day on January 29 at 2.17. A rally above there puts natural gas into a gap that fills at 2.31.

Solid Resistance Zone Previous Trend Lows

Notice the additional confirmation of the next target zone that is highlighted in red. The purple 20-Day MA is included within the zone at 1.995, along with two declining trend lines. This is not to say that natural gas goes straight up. Just that it has the potential to test the 1.95 price zone as resistance before it is done, at a minimum, given the significance of the zone. Significance is increased when multiple indications identify a similar price area.

Response to Fast Drop May be a Sharp Advance

This week’s low of 1.52 completed a 58.2% decline in natural gas in only 17 weeks. That’s a relatively sharp decline. Therefore, it wouldn’t be surprising to see a sharp response in the opposite direction. Today’s aggressive one-day rally has seen the price of natural gas rise by over 11% at the day’s high and it follows a strong bounce yesterday. This alludes to the possibility of an aggressive continuation higher. Most rallies over the past year have started relatively quickly, after only a day or two at a bottom.

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