Support is at or Above 200-Day MA

If a deeper pullback comes before new trend highs, natural gas should find support at or above its 200-Day MA, which is now at 2.24. A bullish breakout of the 200-Day line triggered last Wednesday, and it was confirmed the following day by a daily close above the line. Previously, natural gas had traded below the 200-Day MA since July 2. Since the price of natural gas moved away from the line following the breakout, it is the market’s way of confirming subsequent strength.

Therefore, the first real pullback to test support around the 200-Day line should be successful. If it is not, and natural gas falls below the 200-Day line, it will likely find support around the 20-Day and 50-Day MAs, from 2.18 to 2.16, respectively. However, that would be a deeper pullback that negates some of the strength indicated by the bullish breakout above the 200-Day line.

Higher Targets Remain

There are several higher targets yet to be tested. The first target zone is from 2.52 to 2.54. It is derived by the 50% retracement at 2.52, and an initial target for a rising ABCD pattern at 2.54. That price range is followed by a range from 2.65 to 2.72. The top of the range is significant is it marks an initial target derived from measuring the recent double bottom. A bull breakout of the double bottom triggered last Wednesday on a rally above 2.30. The 61.8% Fibonacci retracement is also contained within the price zone at 2.67.

Monthly Confirms Strength

Dynamics seen in the monthly chart confirm a bullish outlook. A bull breakout on the monthly time frame triggered at the same time the double bottom triggered as the prior swing high of 2.30 was also a monthly high. Since it covers a larger time frame it is given greater significance than the shorter weekly and daily charts. It just triggered last week and continues to point to higher prices for natural gas.

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