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

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Natural Gas Faces Possible Double Top Amid Bullish Signs
By: Bruce Powers | May 30, 2024

• Natural gas may form a double top at 2.85, with the 20-Day MA nearing a bullish crossover above the 200-Day MA, indicating potential demand strength.

Natural gas continued to pull back on Thursday, filling yesterday’s gap before hitting a low of 2.57 for the day. That led to an intraday bounce, which continues. Yesterday’s high of 2.85 looks like it may be a second top thereby setting up a possible double top pattern.

Meanwhile, the 20-Day MA continues to strengthen and is close to crossing above the 200-Day MA. Those two moving averages together provide a more solid potential support zone than either on their own, at 2.46 and 2.44, respectively. A bullish crossover of the 20-Day line above the 200-Day line will provide another sign that underlying demand for natural gas is strengthening.



Possible Double Top

The potential double top pattern is triggered by a drop below the recent swing low of 2.48. Of course, the two moving averages are close by as well. Therefore, all three levels must be busted to the downside to indicate a decisive bearish trigger for the double top that may be sustainable. Given the significance of the support zone that would be busted an accelerated decline may follow. Potential support levels below 2.48 include a price zone from 2.25 to 2.23, defined by the 50% retracement and prior swing low from December, respectively. Further down is the all important 50-Day MA at 2.05.

Weekly Bearish Candlestick Pattern

In addition, last week ended with a bearish shooting star weekly candlestick pattern. It triggered this week briefly but quickly recovered. A second decline below last week’s low of 2.49 may not be so forgiving. Of course, that level should be used along with the other price support levels noted above.

Upside Breakout Starts Above

Notice that the second top from yesterday 2.85 was lower than the first at 292 and tracked resistance around the top declining trendline with a lower high. A decisive rally above Wednesday’s high will provide a sign of strengthening and increases the chance for a retest of resistance around the trendline. Of course, that would also open the door to a possible breakout above the line. Once that occurs last week’s top is at risk of being broken to the upside. That would trigger a continuation of the developing rising trend as well.

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