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Natural Gas Nears $3.40: Breakout or Breakdown Setup
Natural gas holds 20-day MA support as volatility compresses. A break above $3.33 opens $3.40 resistance; failure risks a drop toward $2.80.
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Natural gas spent Friday’s holiday session bouncing off a support zone marked by the 20-day moving average and an uptrend line. Price recovered both trend indicators and closed near $3.27, setting up a retest of the $3.40 resistance area and the 200-day moving average at $3.44.
Volatility has been dropping for two weeks. The daily trading range is compressing into a double inside week on the weekly chart – two consecutive weeks where each week’s range sits inside the prior week’s. Pattern traders call it a pressure cooker. The tighter the compression, the sharper the eventual expansion tends to be.
The resistance wall is built from a series of lower swing highs. The immediate ceiling is Tuesday’s high at $3.33. A break above that opens the path to $3.38, then the major zone near $3.40. On the downside, the uptrend line and 20-day average keep absorbing sell orders. The longer that support holds, the more conviction the bulls show.
The bigger picture tilts bearish. In February, natural gas broke below a long-term rising trendline that had supported price for months. That break established a new bearish phase. The current advance looks like the first corrective pullback within that trend. A trendline that once supported tends to become resistance after a breakdown, and the rally from March lows has already tested that area once. The reaction at $3.40 suggests the resistance is holding.