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Signs of Strength Continue
So, there were bullish indications that reflected strength in demand, but at the same time, in the short term the rally looks extended, particularly, given the bearish reaction following the new rally high. Even if part of the day’s range is recovered, the damage has been done. Further upside may be limited in the short term and a pullback or consolidation could be next on the agenda. Nonetheless, if natural gas retains strength and it exceeds today’s high before a pullback, the next higher target zone is identified at around $3.83.
Big Picture Bullish
Keep in mind that the outlook in the bigger picture remains bullish for natural gas and there will likely be an eventual continuation of the bull trend with a rise above $4.37. A bullish daily pattern is supported by patterns on the higher time frame weekly and monthly charts. The weekly chart triggered a bullish breakout of an inside week this week and a weekly closing tomorrow above last week’s high of $3.44 will confirm the bullish signal. The monthly pattern shows February trading inside the price range from December.
Barrier at Prior Weekly High
It is important to note that the high from two weeks ago at $3.83 was almost tested as resistance today and it was followed by a decline. This would seem to indicate that the two-week high may not be further tested this week. Also, note that $3.83 also marks the next higher resistance zone identified by a couple Fibonacci levels. The weekly high gives that zone greater significance as a breakout above it will trigger a weekly bullish signal.
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