Bullish Reversal From 20-Day MA Area

Since today’s bullish reversal followed a successful test of support around the short-term 20-Day MA trend indicator earlier in the session, the bearish correction should be complete. Notice that today’s low of 2.51 was a little below the 20-Day line and approaching the 50-Day MA along with the 61.8% Fibonacci retracement at 2.48. Further, an original trendline starting from the 2023 peak has been redrawn on the chart as a dotted blue line. Notice that it identified support for today and provides an additional clue pointing to a likely pullback bottom.

Can Strength be Sustained?

The 20-Day MA is a key near-term trend indicator. Since a successful test of support around the line was completed today, the bullish outlook for natural gas has improved. The question now is whether strong demand as seen today can be sustained to eventually challenge the top boundary line of a large symmetrical triangle formation, and possibly break out?

Recently, two attempts to break up through the top line failed and subsequently led to a pullback. The current advance is rising off a successful test of support around the 200-Day MA following a swing low of 2.21, which is bullish behavior. Moreover, the relationship with the 20-Day MA further confirms improving underlying demand.

Rise Above 2.92 Triggers Breakout

A rise above the recent high of 2.92 will trigger the next upside breakout attempt from the triangle consolidation formation. That would indicate that natural gas has risen above the top boundary line of the pattern. Subsequently, there are prior swing highs at 3.02, 3.16, and 3.39. Each marks a potential pivot level where resistance may be seen, or an upside breakout indicates the continuation of strength. Two rising ABCD patterns, one in orange and the other purple, point to potential initial upside targets at 3.35 and 3.45, respectively.

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