Breakouts on Multiple Time Frames

A monthly bullish breakout and double bottom breakout on the weekly and daily charts triggered two weeks ago on a move above 2.30. There was a bit of a lag in the advance afterwards as the breakout was followed by six days of consolidation. On the sixth day natural gas fell to test support around the 200-Day MA (blue) and it found it. Price was rejected from the 200-Day line as buyers took back control leading to two strong days up, followed by today’s high.

Strong Underlying Momentum

Given the strong upward momentum that followed the double bottom breakout and remaining higher targets, it seems likely that natural gas will make another attempt at higher prices following a retracement or consolidation. Strength was recently confirmed by the 20-Day MA crossing above the 200-Day MA and the 50-Day MA has just begun to turn up.

Moreover, a bullish reversal triggered this month on the monthly chart, and strength was further confirmed on the subsequent advance to a three-month high as July’s high of 2.60 was exceeded. The double bottom pattern points to a potential target around 2.72. If that price level is exceeded, then natural gas has a chance to test resistance around the downtrend line. For now, the 78.6% retracement at 2.89 can be used as a proxy for the trendline.

2.50 May See Support

Today’s high reached the top of a previously identified potential resistance zone from 2.65 to 2.67. Resistance was seen from the 61.8% Fibonacci retracement level at 2.67. Although a retracement to test support around the breakout level of 2.30, if bullish momentum is to stay strong a shallower retracement seems more likely. The 38.2% Fibonacci level is at 2.50, while the 50% retracement at 2.45 is joined with the prior swing high at 2.44.

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