Natural gas is holding onto its longer-term uptrend, as price recently bounced off the bottom of its ascending channel near the $2.90 mark and is attempting to resume its climb from there.
If the channel support holds, natural gas could be gearing up for another leg higher, possibly retesting the swing high near $3.00 before making a run at the channel top around $3.06. The Fibonacci extension levels drawn from the latest swing show where sellers could step in along the way, with the 38.2% level at $2.949 lining up closely with the current price.
A break above this could open the door to the 50% level at $2.970, followed by the 61.8% Fib at $2.992, near the channel’s midpoint. A sustained rally past these hurdles could pave the way for a test of the 76.4% level at $3.018 or the 100% extension at $3.061, which coincides with the top of the ascending channel.
Stochastic is curling down from the overbought region, reflecting some exhaustion among buyers after the latest upswing. The oscillator still has room to fall before reaching oversold territory, so a bit more downside consolidation could take place before buyers regain full control.
RSI is also easing lower from the midline, suggesting that bullish momentum is taking a breather for now. Still, as long as the ascending channel support and the shorter-term moving averages hold, dips could be viewed as opportunities to buy before the next leg toward the Fibonacci extension targets and the channel top.
Natural gas could take cues from inventory data, though the upcoming US CPI release could have a more significant impact on USD direction and broader sentiment. The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside, or that the climb from the channel bottom is more likely to gain traction than to reverse. Price is also holding above both indicators, so these could act as dynamic support on any pullbacks.
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