Natural Gas futures put in a large reversal in Tuesday's trading session, gaining back recent losses after finding support at the bottom of a long term Falling Wedge chart pattern. Short-covering and speculative buying may result in a swift move higher as this market has been slipping into the lowest price levels seen so far this year.
Falling Wedge support is now well established at yesterday's swing low of $3.775 per million BTU. The upper band of the wedge is also clearly illustrated and places resistance for the market to overcome at the $3.88 price level.
A continuation of Tuesday's rally would likely bring the nearby futures within striking distance of this potential breakout point. This should occur on strong momentum if there is follow-through potential to rise above the wedge, as the prolonged downtrend within the formation will strengthen the resistance to some degree. A failure to breach the top of the wedge would signal a renewal of the range-bound trade between $3.88 and $3.75 per million BTU as the pattern progresses.
For further information on this and other Autochartist products, visit our website at www.autochartist.com