Natural Gas has been making a stair-step progression of higher highs

Natural Gas futures have finally caught on with the broader commodities bull market, grinding higher from the multi-year lows below $4.00 to initiate a Channel Up chart pattern on the longer term charts. This price action appears favorable against the backdrop of record high oil prices and an increase in speculative interest in the sector.

Natural Gas has been making a stair-step progression of higher highs and higher lows throughout the development of this Channel Up chart pattern, with Friday’s closing price nearly breaching the upper resistance created by the channel.

A higher session on Monday would likely initiate a breakout signal with a projected price forecast near the $5.00 mark, a price level not seen yet this year. A continuation of the Channel Up formation is also possible as a long term uptrend establishes itself with further incremental gains and short term setbacks.

So long as the market holds the key support provided by the channel, presently near the $4.40 price level, the technical strength of the market will remain intact and favor further gains over the longer term. A breach of that support would be viewed as strongly negative given the relative weakness of this market as compared with the rest of the energy complex.

(Source: http://www.fxstreet.com/technical/forex-strategy/daily-commodities-update-technical/2011/05/02/)