Natural gas broke its three-month downward channel as prices settled up 8 cents on Tuesday at $2.677 per mmBtu. Traders and investors will look to Wednesday’s daily candle to confirm the down channel breakout.
Natural gas is likely to face heavy resistance in the $2.80 area. Resistance stands at $2.79 as formed by the base of its first of two recent descending triangles. The 20-Day Moving Average at $2.81 is also likely to provide resistance for the commodity. Support sits at $2.63 and $2.579, the recent low for natural gas prices.
In the early hours of Wednesday, natural gas futures for March ’15 delivery inched higher, reaching $2.795.
The RSI at 45 shows significant room for the commodity to go higher. The previous oversold conditions for the past three months leave plenty of room ahead if the other variables of the commodity align for natural gas bulls.
Likewise, the MACD signal line crossed after yesterday’s green candle, indicating strong potential for upside movement. Traders and investors should look for increased volume and a break of aforementioned resistance levels in order for the commodity to continue its breakout.
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