Bullish Channel Contains Pullback
Natural gas remained in a minor pullback on Friday following a lower swing high of $2.98 from Wednesday. A five-day low of $2.85 was reached, along with a lower daily high of $2.94, establishing short-term support and resistance respectively. However, the pullback remains within the larger developing bullish trend channel, supported by the new higher swing low of $2.75 that was established last week. This structure suggests the pullback may be corrective, with an eventual resolution to the upside still anticipated.
$2.83 Could Mark Support
Given the characteristics of the current pullback, which followed a reclaim of the 50-day moving average five days ago, that average near $2.83 may be tested as support before the short-term decline finds a bottom. That area is further reinforced as support since it also aligns with a swing high of $2.83 from August. Once buyers regain control and a new interim higher swing low is established, the next set of higher targets comes into focus.
Upside Targets Above $3.03
There are several potential upside targets if the September high of $3.03 is recaptured. A 61.8% Fibonacci retracement of the prior downtrend points to the first target around $3.09. Subsequently, the 100% projected target for a rising ABCD pattern is at $3.14. That level shows symmetry between the current leg up (AB) and the first upswing (AB). If buyers can retain control from there, the 78.6% Fibonacci retracement at $3.21 becomes the next potential target.
Inside Week Defines Next Trigger
This week completes an inside-week pattern, with this week’s range contained within the larger range from last week. Therefore, a breakout of this week’s range would be triggered by a move through the high at $2.98, or below the low of the week at $2.85. Given the larger bullish trend structure, a false breakdown followed by a recovery of the week’s low and further signs of strength would be particularly constructive. Such a move could reinforce the view that the current pullback is corrective and that natural gas is preparing for the next upside leg toward the higher targets.
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