Challenging Key Resistance

Notice that there has been only one day since the April bottom that natural gas closed above the neckline, indicating a potential bullish breakout. The current and second test of the neckline may have greater success. Nonetheless, the recent swing high at $3.84 (B) is a key pivot that needs to be reclaimed before higher targets are valid.

Signs of Strength

At the time of this writing, the high of the day was $3.73 and the low $3.66. Notice that support for today and yesterday was found around two lines. There is a dashed line that marks the halfway point of a rising trend channel (green) and an AVWAP support line (light blue) begun from the trend high in March.

A successful test of support around those lines the past two days is a sign of strength as the lines previously represented dynamic resistance. It is also interesting to note that the weekly 20-period moving average has been converging recently with the AVWAP. Currently, they each mark a similar support level.

ABCD Pattern Triggers Above $3.84

A rise above today’s high will trigger a breakout of an inside day, while an advance above yesterday’s high of $3.76 provides a stronger bullish signal. If momentum is retained that should lead to a breakout above the $3.84 swing high and trigger a continuation of a rising ABCD pattern. An initial target from that pattern is at $4.08. But it is joined by the 61.8% Fibonacci retracement at $4.12. They should be looked at as a potential resistance area.

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