Natural gas prices continued their upward trend, registering a higher daily low and higher high in the latest trading session. On December 23, the price of natural gas surged to a five-day high of 2.54, matching the prior swing low from September 26. This bullish momentum, if sustained, could lead to a breakout above this week's high and signal further strength in the market.

Analysts are closely watching the price movement of natural gas, which is currently on track to end the week with a bullish doji hammer candlestick pattern. A decisive breakout above the current high of 2.54 would provide a new bullish signal, potentially propelling natural gas prices towards the 20-Day Moving Average (MA) at 2.68. If the upward trend continues, the next target levels for natural gas would be the 38.2% Fibonacci retracement at 2.77 and a weekly high of 2.79.

However, experts caution that a significant resistance zone lies around 2.88. This level is marked by the intersection of the uptrend line and 20-Day MA, and has previously acted as both support and resistance in past months. A break above this level would indicate further strength, while a failure to breach it may result in natural gas prices testing lower levels.

Despite the overall bullish sentiment, there is a possibility of a downside correction before the rally gains further momentum. A decline below the current low of the day could indicate a weakening trend, potentially leading to a test of recent lows. The trend low is currently at 2.235, representing a completed 78.6% Fibonacci retracement and proximity to the 161.8% extended target for the falling ABCD pattern. However, the magnitude of the retracement and subsequent bullish reaction suggests that the low point may be temporary.

In late November, natural gas experienced a breakdown from a large bearish flag pattern, triggering a steep decline. As is common with pattern breakouts, a reversal to test prior support as resistance often occurs. While a return to the lower rising trendline area is not expected, it remains a potential possibility. Generally, the breakout of a bearish flag pattern would indicate a potential for new lows, going below the previous trend low of 1.95 from April. However, market patterns are known to deviate from expectations and may transform into different formations.

As natural gas prices continue to show bullish momentum, investors and traders are closely monitoring key resistance levels and upcoming price movements for further insights into the market's direction.