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Natural Gas Price Forecast: Bull Trend Continues Towards 2.68
By: Bruce Powers | May 17, 2024

• With a 65.4% rise from the April low, natural gas targets 2.68-2.70, backed by strong bullish momentum and key breakout signals.

Natural gas surged to a new trend high of 2.64 on Friday and it continues to trade near the highs of the day, at the time of this writing. That put it up by 65.4% from the April 25 swing low (C). A bullish trend continuation signal was triggered on a rally above Thursday’s high of 2.575.

The advance also signaled a breakout from the 2.56 price target for a rising ABCD pattern extended by 200%. Resistance was seen yesterday near that price level. It reflects price symmetry between the two swings in the pattern. The CD leg of the advance is two times the initial AB leg. Therefore, it looks like natural gas is going to the next target zone as shown on the chart.



Fibonacci Confluence on the Radar

Next, watch the approaching Fibonacci confluence zone from 2.68 to 2.70. The price of natural gas may get there quickly as it is on track to end the week near the highs of the week, and bullish momentum has accelerated as seen in Friday’s wide price range and strong green candle. Further up is the top line of a declining blue dashed trend channel, as well as the 78.6% Fibonacci retracement at 3.00.

Caution Warranted as Natural Gas Further Extends

This looks like a swing back rally in response to the sharp decline from the January 12 swing high of 3.38. Natural gas fell by 1.86 or 54.9% in 25 days, finding a bottom at 1.52. Since the subsequent swing low at 1.58 (C) the price of natural gas has risen by as much as 65.3% as of today’s high. The relative strength index momentum oscillator (RSI) continued to rise today and reached a height not seen since the peak in April 2022.

That peak was followed by a quick 21% decline to the 38.2% Fibonacci retracement. If a similar scenario were to unfold with the current rally, natural gas would complete a 38.2% retracement at 2.23. That is assuming that 2.64 turns out to be a swing high. On the other hand, if the retracement began from the top of the upcoming resistance zone at 2.70, a 38.2% retracement would put natural gas around 2.28.

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