Looking for Additional Bullish Signs

Nonetheless, further signs of strength are needed. Watch for a decisive rally above today’s high of 3.96. Natural gas would then be heading towards the 161.8% extended target for a rising ABCD pattern at 4.06 (purple). After that, it looks like the next potential resistance zone begins around 4.33.

That price level is an initial target from another and smaller rising ABCD pattern (red). There are several other targets slightly higher from there around 4.18. Higher up is the 38.2% Fibonacci retracement of the full decline that started from the August 2022 peak at 4.77.

Long-term Bull Breakout Dominates

A decisive break out of a long-term symmetrical triangle pattern was triggered on November 20. The first pullback following the breakout completed at the recent 2.98 swing low. Notice that the pullback successfully tested prior resistance (breakout area) as support, including the purple 20-Day MA.

This tells us to pay attention to the relationship between the price of natural gas and its 20-Day MA. In addition, the pullback completes the initial phase following a bull breakout and sets the stage for a bullish continuation that could see an acceleration of momentum given the long-term nature of the triangle formation and long-term trend breakout.

Strength in Rising Trend

Besides the characteristics of the triangle breakout, the bull trend that starts from the February 2024 market bottom at 1.52 (orange), triggered a bullish continuation on a rise above 3.16 recently. The fractal nature of the advance can be seen in the three rising ABCD patterns that measure different portions of the rising trend. Moreover, last week’s breakout above the 2023 trend high at 3.64 showed improving demand for natural gas.