Daily Close Above 50-Day Line is Bullish

A daily close above the 50-Day line is bullish and may provide a clue that indicates further underlying strength in the price of natural gas. Also, the 38.2% Fibonacci retracement level at $3.51 was exceeded for the second time today and a strong close above that price level looks likely. However, today’s rise was the first test of resistance around the 20-Day MA since the drop below it on January 27. Resistance has been seen but whether it can be sustained remains to be seen. Given the signs of underlying strength, a reclaim of the 20-Day MA may be possible before a pullback.

Reclaim of 20-Day Line Would Show Further Strength

If the 20-Day MA can be reclaimed, the next higher target zone is from around $3.64 to $3.69. That price zone consists of the prior swing high and peak for 2023 at $3.64, a 50% retracement level at $3.67, and a 127.2% extended target for a small rising ABCD pattern (not shown). The initial target for the ABCD pattern was completed at $3.58.

Now that the 20-Day line has fallen to converge with the $3.58, the $3.58 price zone takes on greater potential significance. Since a breakout above the 2023 high of $3.64 provided a new bullish trend reversal signal for the long-term trend in late-December, it is a key price level. A rise above it would be bullish, and especially a daily close above it.

Last week’s price range and likely this week as well are within the price range from two weeks ago from $2.99 to $3.83. Since the low end of the price range was tested as support with last week’s low, an upswing to test resistance near the week’s high could be in process.

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