Natural Gas Buyers Defend $3.02 After Failed Breakdown

Natural gas bounced from a fresh trend low of $3.02 on Monday, closing above both the 20-day and 100-day moving averages. The session formed a bullish outside day with a higher high and higher low than Friday. Technical analyst Bruce, a CMT charter holder, views that pattern as a failed breakdown that often precedes a continuation of the prior uptrend.

The double-top reversal that triggered below $3.10 three days ago has not produced follow-through. Only one daily close has settled below that level. Friday's session closed slightly above the 20-day moving average after trading beneath it for most of the day. Monday's outside day reinforces that support zone. A sustained decline below $3.02 would break the pattern. So far buyers have defended that level twice in two weeks.

Resistance sits at $3.18, the 10-day moving average, which held price down for four sessions last week. Above that, the swing high at $3.25 is the key near-term structure. A close above $3.25 would reclaim the 10-day moving average and open a path toward the next resistance near $3.35. The 100-day moving average at $3.12, reclaimed on Monday, now acts as a first support layer.

The 20-week moving average has also provided support near the lows of the past two weeks. Monday's low tested that zone again. When prior resistance turns into support, as it did with the 20-week average three weeks ago, the trend often resumes. Monday's price action fits that pattern, Bruce said.

A close below $3.02 would invalidate the failed breakdown and free the $2.90 area. A close above $3.25 would confirm the uptrend.