Key Resistance Tests Ahead

In addition to the 20-Day moving average, natural gas faces resistance at last week’s high of $2.92. A close above that level would trigger a one-week bullish reversal signal. If successful, the next obstacle lies at $2.97, an interim swing high that coincides with resistance identified by an anchored volume weighted average price (AVWAP). This AVWAP level was previously support until early August, suggesting a strong reaction could emerge on the first test as resistance.

Upside Targets and Moving Averages

The bullish wedge pattern projects upside targets at $3.15 and $3.19, depending on how the beginning of the wedge is measured. However, before those objectives can be reached, natural gas must push through lower resistance levels. The 50-Day moving average, now at $3.21 and trending lower, presents another hurdle. Since it failed as support in early-July, a first retest as resistance may prove difficult to overcome. Its potential convergence with a long-term uptrend line increases the significance of this potential barrier if price advances that far.

Shift in Momentum

The falling wedge represented a tight consolidation with waning bearish momentum. Sellers were unable to drive a deeper decline, and buyers ultimately gained control. While Wednesday’s breakout is only the first sign of a potential trend shift, it sets the stage for further upside attempts. Follow-through strength above $2.92 and $2.97 will be essential to confirm the breakout and establish a stronger bullish tone.

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