Oil & Gas - Energy - Commodities - Resources (OILBRENT)

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Natural Gas Potential for Bullish Trend Continuation
By: Bruce Powers | May 2, 2024

• Weekly chart shows bullish continuation, with last week's high of 2.00 a key level to watch.

Natural gas triggered a bullish reversal on a rise above Wednesday’s narrow range day high on Thursday before encountering resistance at 2.05 and stalling the ascent. This increases the chance that the low of 1.91 from the past week will maintain support. However, further bullish follow-through is necessary to further confirm the indication. Once today’s session is complete, that will start to happen on a rally above today’s high. But there will not be a bullish trend continuation signal until the recent high of 2.09 is exceeded to the upside.



Bullish Weekly Signal

A bullish continuation on the weekly chart was triggered this week further supporting a continuation higher for natural gas. Last week’s high of 2.00 is the price level to watch relative to this week’s closing price. It is currently trading above that price level and a daily close above it will confirm the bullish move on a weekly time frame. Keep in mind that the larger time frames influence the shorter time frames.

Low Volatility Leads to Higher Volatility

Further, volatility in the price of natural gas dropped during the formation of the bottom symmetrical triangle consolidation pattern. What usually follows low volatility? Higher volatility. In other words, the stage is set for a potential rally into higher price zones. That doesn’t mean it goes straight up. There is still the possibility of a dip below this week’s low of 1.91. But it becomes less likely if this week ends above 2.00.

Signs of Strengthening

This week’s high of 2.09 completed an initial rising ABCD target at 2.07 and the high reached the underside of the 20-Week MA, an obvious location for possible resistance, which is what happened. Further supporting a continuation higher is the relationship with the declining blue dashed parallel trend channel. The area around the lower channel line has acted as support for five days and now strength is returning. That is a sign of progress as the top channel line becomes a potential target once this week’s high is exceeded. This doesn’t mean it will be reached but the possibility exists. Therefore, the chance of eventually reaching lower targets increases.

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