Moreover, a weekly bull trend continuation signal triggered earlier this week, and it will be confirmed on that time frame with a close today above last week’s high of $3.67. Price behavior in one time frame can impact the patterns in a lower time frame. This is the basis of multi time frame analysis. Therefore, especially with a strong close above $3.75, the price of natural gas will show strong bullish momentum. It will be needed as it is rising into a consolidation top in the form of a head and shoulders pattern.
Aggressive Buying on the Way Up
Bullish implications of the developing advance, as seen in the daily chart, include two brief pullbacks of only one day before the uptrend reasserted itself. And in each case the pullback was relatively shallow. Now that a new high for the advance has been reached, those shallow pullbacks that represent sustained bullish momentum suggest a continuation of the rally.
Next Target $3.95
A rise above a minor interim swing high of $3.83 will provide the next sign of strength along with an advance above today’s high of $3.82. The next upside target would then be the 78.6% retracement level at $3.95. Keep in mind that as the trend continues to rise the risk of a sharper pullback increases. Given the current conditions, it looks like the 78.6% price zone is that next area where the chance of a bearish correction increases. The lower swing high that generated a right shoulder for the head and shoulders pattern is at $4.25. It represents the more significant potential resistance zone as a rise above it will provide a bullish reversal signal.
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