Natural Gas Triangle Narrows as $2.89 Resistance Holds

For now the market is waiting for a catalyst. The triangle is narrowing, and the 50-day moving average is closing in. One of those two lines will break first.

Bruce, a CMT charter holder with over 20 years of experience, noted that the triangle pattern could be interpreted as a bearish pennant if a breakdown below $2.69 occurs. That would add momentum to the decline. Conversely, a reclaim of the 50-day moving average and a breakout above $2.98 would challenge the bearish structure, though the larger trend would remain negative without further confirmation.

The proximity of the 50-day moving average at $2.95 to the current resistance zone means any upside breakout attempt will face that moving average as an immediate hurdle. If price clears both $2.89 and $2.95, the next target is $2.98. A failure at $2.89 keeps the focus on $2.69.

For traders tracking the setup, the narrowing triangle means a volatility expansion is likely. The direction of the breakout will set the tone for the next several weeks. A break below $2.69 opens the path to re-test the June lows, while a move above $2.95 would put the bearish thesis on hold.

The natural gas market has seen a build in short positions, with recent data showing 207k shorts facing a heat test as front-month holds support. That positioning adds to the significance of the $2.69 level – a break below could trigger a cascade of selling. On the flip side, a squeeze above $2.89 could catch those shorts off guard.