Daijiworld Media Network – New York
New York, Jan 20: Natural gas prices signalled a potential bullish reversal after the active March contract spiked to a high of $3.03 on Monday, coinciding with the contract rollover. Trading remained subdued as futures markets closed early due to the Martin Luther King Jr. Day holiday.
Technical indicators point to growing bullish strength, with prices breaking out of an inside-week pattern to the upside and surpassing the high recorded two weeks ago. This move has triggered a two-week bullish reversal, which will be further confirmed if prices register a daily close above the two-week high of $2.98. Even a close above last week’s inside-week high of $2.90 would be sufficient to validate the breakout, suggesting buyers are likely to remain in control in the near term.
The recent bearish correction had briefly undercut a higher swing low of $2.74 from August, triggering downside pressure. However, Monday’s sharp advance marks a bullish reversal following that breakdown. With the recent peak at $5.02 marginally exceeding the previous March high, and similar behaviour seen on the downside, price action is beginning to form a broadening pattern.
Market analysts note that such a formation often signals heightened volatility. Given the sharp decline earlier and the emerging broadening structure, the rebound from the January bottom could unfold with strong and erratic upside moves. At the very least, technical signals suggest a temporary bottom has likely been established.
In the near term, traders are expected to use any pullback to reinforce bullish positions. Key dynamic support is seen near the 10-day moving average at $2.79. The $2.74 zone also remains crucial, as it previously acted as resistance, with highs on both Thursday and Friday capped at that level.
On the upside, the minimum projected target stands at the 38.2% Fibonacci retracement level of $3.51. Before that, the reclaimed 10-day average puts the 20-day moving average at $3.13 in focus as the next immediate resistance. Further upside targets include the 200-day moving average near $3.65 and the 50% retracement level around $3.80.
Analysts caution that broadening formations tend to expand price ranges in both directions. As a result, a fall below $2.58 could still trigger a fresh trend low while remaining within the broader pattern, before another upswing unfolds.
Market participants are advised to remain alert to volatility as natural gas continues its price discovery phase.