Natural Gas Reversal: Breaking Trends and Testing Strength

Natural Gas Forecast Video for 29.11.23 by Bruce Powers

Following yesterday’s bearish breakdown below the uptrend line, natural gas has reversed higher today with an opening gap and subsequently triggered a breakout above Friday’s high of 2.95. It looks like yesterday’s bearish signal has been negated so far. While a daily close above the uptrend line is a show of strength following yesterday’s breakdown, a close above the 2.95 high will be a stronger indication of demand. Particularly given today’s gap, a test of the uptrend line looks like a possibility prior to natural gas being ready to proceed higher.

Successful Test of 50-Day EMA Resistance

Today’s high of 2.99 tested resistance around the 50-Day EMA at 3.01 and then turned back down. Natural gas continues to trade weak, and it is near the lows of the day at the time of this writing. A gap fill looks to be in play, which will fill once yesterday’s high of 2.82 is reached. That would also satisfy a test of support around the uptrend.

Approaching Trendline Crossover

As you can see on the chart, current price action is contained within a symmetrical triangle type structure when considering the crossover of the uptrend and downtrend lines. This tells us there are approximately three more days at a maximum before one of the lines will be busted. A drop below the rising lower trend channel line increases the chance for a test towards yesterday’s low of 2.71. Moreover, a break above the downtrend line is a sign of strengthening. However, the downtrend line is less significant than the uptrend line as it covers a shorter period. Although a move above the downtrend line may show strength, it may not be accompanied by a pickup in momentum.

Bullish Trigger on Weekly Chart

Clarity may be indicated by the weekly chart. Today’s rally triggered a bullish breakout of the weekly chart on a move above 2.96. It was the first advance above the prior week’s high since the 3.64 peak five weeks ago. Nevertheless, a daily close above last week’s high of 2.96 is needed to confirm strength. There is no indication of that happening so far.

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