Natural Gas Pauses After Test of Key Resistance
Natural gas tested the week’s high of $3.13 again on Thursday, with the day shaping into an inside session. The range, from a low of $3.02 to a high just below resistance, holds mostly in the upper half of Wednesday’s candle — a sign of sustained buying interest. Importantly, resistance this week has developed near an interim swing high from August 7 and aligns with the 50-Day moving average, currently $3.14 and falling. This marks the first test of the 50-Day average as resistance since the bearish reversal of July 21, making an initial reaction at this level expected.
Indicators Point to Ongoing Strength
Momentum has been building since last week’s bullish breakout from a falling wedge pattern. That advance was reinforced by a reclaim of several key resistance levels, including the 20-Day moving average. If today’s low of $3.02 is broken, natural gas could revisit support near the long-term anchored VWAP, now at $2.96, with further downside risk toward the 20-Day moving average at $2.89. For now, though, the market continues to trade well above those levels, suggesting that buyers remain in control.
Watching the 50-Day Average
The 50-Day moving average is a critical pivot. A sustained advance and daily close above this average would open the door for a rally through the July swing high of $3.19 and potentially toward the 200-Day average, now near $3.50. Conversely, another rejection here would not be surprising given the nearly 20% rally off the recent $2.62 low. A brief consolidation or pullback would provide a healthier setup for continuation, rather than a straight-line advance.
Weekly Confirmation in Play
On the larger timeframe, natural gas continues to show signs of strength. Last week produced a wide-ranging bullish engulfing pattern on the weekly chart, supported by a bullish reversal confirmation this week. A weekly close above last week’s high of $3.02 would cement the breakout and bolster the case for a push through current resistance. That confirmation, coupled with strong price behavior above the AVWAP and 20-Day average, underscores improving demand.
For a look at all of today’s economic events, check out our economic calendar.
