Density wave oscillation (DWO) is an important safety concern for boiling water reactors (BWR) due to their high void fraction in the core. Power extensions to existing reactors such as the Maximum Extended Load Line Limit Analysis Plus (MELLLA+) lead to increase susceptibility of DWO-type instability following an anticipated transient without scram (ATWS). Experiments performed at the Karlstein Thermal Hydraulic Test Facility (KATHY) have reproduced the reactivity feedback mechanism in BWRs under ATWS conditions. Using a neutronics module simulator, the KATHY facility was able to provide data on the effect of different neutronic parameters on DWO onset. This paper serves to assess the capability of the thermal-hydraulics code TRACE V5P7 for simulating DWO onset and development under natural circulation with neutronic feedback. A model of the KATHY natural circulation facility is created in TRACE and a reactivity feedback mechanism is implemented using a manual control scheme to simulate the parametric effects provided by the tests. This comparison allows for an assessment of the TRACE code as well as a better understanding of the instability mechanisms and behavior under the given conditions.