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Natural Gas Finds Support, Eyeing Upside Targets
By: Bruce Powers | March 8, 2024

• Natural gas found support at the 50% retracement and 20-Day MA. Bullish signal will occur on rise above today’s high of 1.84.

It looks like natural gas found support today around the 50% retracement and 20-Day MA. Today’s low was 1.755 and you can see how it bounced right off the price zone. That may be the bottom of the retracement given that the 20-Day line was tested as resistance on Tuesday, February 27. If successful, today’s low would be the first successful test of the 20-Day MA as support then. A further bullish signal could lead to a test of the recent 2.01 swing high and higher targets.



Successful Test of Support at the 20-Day Moving Average?

Prior to February 38 natural gas had been below the 20-Day MA since the drop on January 18. Traditionally, once prior resistance is successfully tested as support in a developing uptrend, the uptrend, in this case a counter-trend rally, may be ready to proceed. If that is the case with natural gas a bullish signal will be generated heading into next week on a rally above today’s high of 1.84.

Highlighting 2.24 Price Target

If the rally from the 1.52 swing low continues into new trend highs, there are interim price levels to watch on the way up. However, the market seems to be highlighting the 2.24 price area as a potential target. There are three pieces of analysis pointing to that price area. The 50-Day MA has recently converged with the 38.2% Fibonacci retracement of the full decline starting from the January 9 peak and they converge at the support area seen at that 2.235 swing low from mid-December.

Nonetheless, to reach 2.24 natural gas will first have to rise above the recent high of 2.01 and then exceed potential resistance up to a second 38.2% Fibonacci retracement level at 2.04. Beyond the 50-Day MA is the 200-Day MA at 2.61. It can be combined with the 61.8% Fibonacci retracement at 2.68, generating a price zone from 2.61 to 2.68.

Weakness on Drop Below 1.755

Regardless of the above bullish scenario, a decline below today’s low of 1.755 could lead to a deeper retracement. The 61.8% Fibonacci retracement is at 1.71. It provides a price level to watch for signs of support on the way down if that scenario does unfold.

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