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

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Natural Gas Eyes Higher Targets After Key Breakouts
By: Bruce Powers | June 10, 2024

• With natural gas testing new highs, recent trendline and pennant breakouts indicate more upside potential if key support levels hold.

Natural gas continued its ascent today, reaching a new trend high of 3.10 before pulling back intraday. That high almost completed a 1.414 (3.11) Fibonacci extended retracement of the most recent decline that began from the May 23 peak. Today’s low of 2.86 successfully tested support at prior resistance from last Thursday’s high, as well as support of the long-term downtrend line that was recently broken. Although Monday looks like it will close weak, in the red and in the lower third of the day’s trading range, the bigger picture remains promising for the bulls.



Two Breakouts Confirm Strength

Today’s pullback follows three up days culminating in a long-term trendline breakout confirmed by last week’s close above the line. In addition, there was a bull breakout of a shorter-term pennant trend continuation pattern last week as well. The breakouts just began, so there should be more upside to go. However, how the price of natural gas behaves around key price levels will provide clues. All breakouts can fail and some follow through faster than others.

Watch Behavior Around Support

The pennant breakout should help maintain upward momentum (faster) as the long-term breakout of the trendline progresses (slower). Pullbacks should recover quickly and not retrace too deep. The area around support of the declining trendline is key for the bullish outlook to be maintained in the near term. However, if there is a daily close below the trendline, the risk of a deeper retracement rises.

There are several price areas to watch for support below the trendline. First, there is the top boundary line of the pennant. Thursday’s low is at 2.79 and be used as a guide as well since it bounced off support of the top boundary line. Further down is the 20-Day MA at 2.64 currently, and the 200-Day MA at 2.46.

Upside Targets Start with 3.18

On the upside, there is a target derived from the bull pennant up at 3.78. It remains to be seen whether that target will eventually be reached, and it could take a little time. Interim price targets include the swing high from January at 3.39 and the 2023 peak at 3.64. There is also the completion of an 88.6% Fibonacci retracement at 3.18.

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