Support from 2.50 to 2.55

Near-term potential support is around 2.58 to 2.55, consisting of a prior interim high and the 20-Day MA, respectively. Also, a weekly low is at 2.51 along with the 50-Day MA at 2.53. So, in summary there is a potential support zone from 2.58 to 2.51, while a drop below this week’s low could lead to an even deeper pullback.

Formed an Inside Week

This week will end with an inside week for natural gas. Therefore, a potential weekly bullish breakout will be set up for next week. A rise above the week’s high of 2.82 will signal the breakout, while a drop through the low of 2.51 may lead to a deeper retracement.

Given the price structure for natural gas, the expectation is for an eventual upside breakout. One reason is that last week triggered a bullish weekly reversal from a retracement low. But this doesn’t mean the lower price won’t be tested before a bullish breakout. Nonetheless, the market will signal based on its reaction to price levels.

Signs of Strength Begin Above 2.75

Earlier signs of strength will first be indicated on a rise above today’s high of 2.75, and then each daily high for this week starting with Tuesday. Notice that there are four days in a row where the high price for the day was lower than the prior day. Nevertheless, a breakout above the weekly high, or swing high of the daily chart, will provide a more convincing bullish signal, that may subsequently lead to an upside breakout from a large symmetrical triangle pattern.

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