Upside Targets Expand on Break Above Resistance
A decisive reclaim of the 50-day moving average would put higher targets in sight. At the top of a potential target range is the beginning of the wedge formation at $3.49. But a little lower is the long-term 200-day moving average, which is now at $3.41 and falling. The 78.6% retracement of the prior decline is another more likely target to be reached at $3.82.
Larger Downtrend Context Still in Play
Although a larger downtrend structure is forming, a pullback towards the long-term uptrend line and 200-day moving average to test them as resistance would be normal price behavior after a significant breakdown. In February, the uptrend line failed as support, which led to the April low near $2.50. A swing back to test prior support as resistance after a long-term breakdown, would be normal and healthy price behavior. This is why the upside targets following the wedge breakout, remain possible.
Key Support Levels Define Bullish Scenario
The bullish scenario is retained unless the recent minor interim swing low at $2.59 is key support based on structure. Of course, the recent low of $2.50 is another key price level.
If you’d like to know more about how to trade natural gas, please visit our educational area.
