Natural gas prices rally the most over two days since November, eyes on resistance
Natural gas prices rallied the most in two days since November; the downside technical bias holds, eyes on moving averages and on four-hour setting, the former bearish rectangle is back in play.
Best two-day rally since November
Over the past two days, natural gas prices rallied over 11.5 percent, marking the best 48-hour period since early November. This followed the presence of positive RSI divergence, showing that downside momentum was fading. Is the heating commodity reading for a reversal? Or will the broader downtrend prevail?
On the daily chart below, natural gas finds itself revisiting the 100% Fibonacci extension level at 2.326. This was after prices established a new low at 1.967 before turning higher. Broadly speaking, a bearish Head & Shoulders chart formation remains in play, offering a downward technical bias towards the 2020 low at 1.44.
Immediate resistance is at 2.326. Breaking higher exposes the 20-day Simple Moving Average (SMA). The latter is helping maintain the downward focus and could play out as key resistance. Extending higher exposes the May 2021 low at 2.832.
Daily chart
Back in the rectangle
Zooming in on the four-hour chart will give us a better idea of how the near-term bounce is shaping up. Natural gas closed back into the former bearish Rectangle from early February. The floor was at 2.341. Still, confirmation is lacking at the time of publishing. Meanwhile, prices are about to face the 100-period SMA, which could maintain the downside bias.
A turn lower back under 2.341 places the focus on the current February low at 1.968. Otherwise, clearing the SMA places the focus on the ceiling of the rectangle around 2.657. Confirming a push above the latter could offer an increasingly bullish perspective.
Four-hour chart
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