Trend Resistance Zone from 2.25 to 2.30

Before natural gas can advance to test higher areas of potential resistance it first needs to first breakout above a potentially formidable price zone from around 2.25 to 2.30. It includes the recent swing high of 2.30 and an earlier interim swing high of 2.27. The price zone begins with the 50-Day MA (orange) at 2.25 and is joined by the 200-Day MA (blue) at 2.28. Whether upward momentum can continue in the near-term or the price of natural gas consolidates further with the recent price range.

Expanding Triangle Developing

As of this week’s new trend low, there is potential expanding triangle (purple) taking shape. It is a consolidation pattern where the price range expands rather than contracts, such as in a symmetrical triangle. As it expands false breakouts may be experienced either at the bottom or top of the pattern. Currently, the price range is from yesterday’s low of 1.875 to the 2.30 prior swing high.

Correction May be Complete

This week’s low of 1.875 had natural gas down by 40.65% from the June swing high of 3.16. That is a healthy correction that stalled around the 78.6% retracement zone (1.92). However, it exceeds all but one of the bearish corrections that have occurred since February 2023. The largest was a decline of 55.0% from the January swing highs. Also, notice that there is a bullish divergence with the relative strength index (RSI) momentum oscillator, which is a bullish indication.

If natural gas can get above the 2.30 swing high and stay above it, it will have a chance to eventually test resistance around the top trendline. Other interim potential targets are lower starting with the 38.2% Fibonacci retracement at 2.37, and the 50% retracement of 2.52.

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