Higher Swing Low Supports Continuation Setup
Thursday’s low will generate a higher swing low at $2.59, which should end the first pullback following the upside breakout of the wedge. Since the breakout of a lower high was triggered (above $2.76) along with a higher swing low being established, there should be at least another leg up in the bounce, at a minimum. That makes the falling 50-day moving average at $2.88 a prime candidate for the next upside target zone. Although it was successfully tested as resistance during the prior upswing and it may do so again, the wedge breakout suggests higher prices.
Longer-Term Targets and Dynamic Resistance
A minimum target for the pattern is to its beginning, which is at $3.49. This doesn’t mean that the potential target will be reached, but it does suggest that bullish momentum may now improve. Both the 100-day moving average at $3.40 and the 200-day moving average near $3.43 further validate the wedge target. Keep in mind, though, that since they are falling and represent key long-term dynamic resistance, the upper target range will continue to adjust lower over time as price interacts with these declining averages.
Early Recovery Phase with Conditional Upside
Taken together, the above analysis suggests natural gas may be transitioning from a corrective phase into an early-stage recovery. However, given long-term resistance levels noted above, the initial upside path remains defined and conditional on continued support holding above key breakout levels.
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