Natural gas price weekly forecast: have prices finally found a floor?

Best week since October

Natural gas prices rallied an impressive 12% last week. It is impressive because you must look at it within the context of persistent losses since August 2022. This was the best five-day performance since October last year. The broader downside technical bias remains, and the bearish trajectory of a Head & Shoulders chart formation is still in focus.

Still, given the bullish performance of late, are prices setting up for a broader reversal? If that happens, could it be enough to overturn the downside bias?

Natural gas weekly chart

First close above the 20-Day SMA since December

On the daily chart, natural gas prices turned higher after persistent positive RSI divergence since the beginning of this month. This was a sign of fading downside momentum which can at times precede a turn higher. Prices were unable to hold a close under the 100% Fibonacci extension level at 2.326 after a low was established at 1.967.

Natural gas subsequently turned higher and managed to close above the 20-day Simple Moving Average (SMA). This is significant because we have not had a close above this SMA since December 16th. Confirmation is lacking at the time of publishing.

Further upside gains could open the door to extending gains toward the 50-day SMA. The latter could hold as resistance, maintaining the downside bias.

Natural gas daily chart

Bearish rising wedge brewing?

Zooming in more on the four-hour chart shows that prices are trading back in the former range of a bearish rectangle from earlier this month. The lower and upper boundaries are at 2.341 and 2.657, respectively. A closer look reveals that there seems to be a bearish Rising Wedge brewing of late. This could offer an immediate upside bias.

On this timeframe, natural gas has also broken above the 100-day SMA, opening the door to extending upward. With that in mind, while the broader outlook remains bearish, there is an increasing case for a more neutral setting in the week ahead.

Depending on how that goes, the picture for natural gas could be starting to change.

Natural gas four-hour chart

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