Are you ready to capitalize on the latest bullish signs in the stock market? This week, natural gas broke out of a bullish descending wedge pattern, signaling a potential uptrend. Not only did natural gas break out decisively, but upward momentum has remained strong. In fact, the past three days have closed in the top quarter of the trading range, and the daily swing high of 2.15 also coincides with last week’s weekly high. This is a strong bullish signal, confirming a weekly reversal after seven weeks of downward movement from the recent swing high at 3.16.
But before we see a continued uptrend, there could be some further rest. Keep an eye on the 20-Day MA at 2.09 as the first level of support, which was successfully tested with today’s low of 2.10. If there is a pullback, the 50% retracement level at 2.04 and the price zone around the 2.03 to 2.01 daily lows from Thursday and Wednesday could provide additional support. This area also aligns with the top boundary line of the wedge pattern.
As we watch for short-term weakness, the degree of retracement will give us insight into the level of demand for natural gas. Ideally, finding support at or above the 20-Day MA and then continuing higher would be a bullish sign. The weekly reversal indicates a likely continuation of the rally, but the aggressiveness of the rally remains to be seen. While a prolonged retracement or consolidation is possible, the clear breakout this week suggests that bulls may maintain control.
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