Retained Long-Term Support

Potential support is indicated around a long-term uptrend line and anchored volume weighted average price (AVWAP) line (light blue) begun from the 2024 trend low. The AVWAP line is now at $2.96, and it can be used like a moving average line. Notice that although natural gas dipped below the AVWAP briefly the past few days, it quickly recovered. There was only one daily close below that line, which was on Monday.

Given the long-term nature of the indicators marking support, a bottom may have been reached. Therefore, today’s upside breakout should be followed by additional signs of improving demand. If this scenario does not materialize and natural gas continues to test the support zone, a more substantial consolidation base may develop.

Above $3.13 Shows Strength

A sustained breakout above a recent interim swing high at $3.13 will provide the next sign of strength. But the more significant price level is around the lower swing high from July 29 at $3.19. That is also a weekly high. A sustained breakout above that level will trigger a bullish reversal as a lower swing high will be broken, and a weekly reversal will trigger as well. Today’s advance increases the chance that a higher swing low will be established but a rally above it will provide a stronger indication.

Weekly Bull Pattern Possible

If the week ended today, a potentially weekly bull hammer would be established. That would provide another sign that the support zone may hold. Nonetheless, since there are only two more trading days to the week, the week may yet end with a bull hammer candlestick pattern. If it does, a breakout above the weekly high will provide a bullish reversal signal on the weekly chart starting next week.

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