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Natural Gas Reversal: Breaking Trends and Testing Strength

By:
Bruce Powers

Natural gas defies bears, breaking trends with a reversal gap and testing strength above 2.95, signaling potential shifts in market dynamics.

Natural gas plant, FX Empire

In this article:

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.

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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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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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