Strong bullish trend in natural gas points to higher levels
Bouncing off a decade low in 2012
In the second quarter of 2012, natural gas traded down to 1.90, a level not seen for a decade and slightly above the 38.2 Fiboancci extension measured from the 2008 all-time high. At the same time, the RSI showed divergence that indicated the bearish trend was exhausting.
That was, in fact, the case. Gas bounced and started a new bullish trend that is still ongoing. And for the first time since 2008, the gas price was testing the 200 weekly moving average only to be rejected.
It will now try to penetrate it again and the indicators suggest it will be successful - and that gas will trade higher.
Taking out 61.8 resistance
Natural gas barely touched the 200 daily moving average in mid-February before it bounced. Since then, it has not looked back. It is moving higher in a strong bullish trend that has taken out the 61.8 retracement and resistance at about 3.60 – its peak in January.
The 2012 high recorded in November just below 4.00 could soon be tested.
RSI is bullish and shows no sign of divergence. MACD also indicates bullish momentum ahead.
The lower Bollinger band was beginning to narrow, but today’s rally has made it expand again. So now both bands are expanding, indicating the trend is still in its developing stage.
If gas takes out the resistance at about 4.00, a move to at least 4.27 is in the cards.