Natural Gas May Have Just Printed a Blow-Off Top — And a Textbook Shooting Star Reversal

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A Blow-Off Top: What the Market Just Signaled

A blow-off top is a fast, emotion-driven price surge marked by vertical movement, widening intraday ranges, and a sudden spike in volume. This is often followed by an abrupt reversal once buyers run out of fuel. Natural gas checked several of these boxes:

• Steep, accelerating price action leading into Friday’s session
• Expanding intraday ranges, signaling volatility and unstable buying
• Late-stage panic/greed buying, typical when traders chase a runaway move
• An immediate rejection of new highs, a hallmark of exhaustion

This pattern is especially common in commodities, where emotion and leverage frequently amplify both the rally and the reversal.

A Clear Break of the Upward Trend Line

For weeks, natural gas had been respecting a well-defined rising trend line—a guidepost showing strong underlying demand and persistent momentum. That structure broke decisively:

• Price pushed sharply above the trend line (an overextended breakout),
• Then reversed just as sharply back below it,
• Confirming that the trend’s momentum has weakened.

A break of the primary trend line doesn’t guarantee a top, but combined with reversal candles and failed highs, it strongly raises the probability of a deeper pullback.

The Shooting Star Signal: A Textbook Intraday Reversal

The most important technical feature of the recent action is the shooting star candle formed by the intraday pattern that stretched across Friday and Monday. In natural gas, where volatility compresses time, multi-session intraday candles often tell the same story as a single-day pattern. A shooting star is one of the most reliable bearish reversal formations. It appears near the end of an uptrend and reflects a battle between buyers and sellers:

• Price surges strongly at the open
• Pushes to a new high, often dramatically
• Then reverses sharply lower
• Closes near its session low, leaving a long upper wick and a small real body

That’s exactly what unfolded:

• Friday’s intraday spike set the “wick”—an aggressive extension higher.
• Monday’s early attempt to push higher failed immediately.
• Selling pressure took control, leaving the combined pattern looking like a classic shooting star perched at the top of a parabolic run.

This is particularly bearish when it forms:

• After a fast vertical rally
• Near a major psychological level
• After a break of trend support
• With momentum oscillators at overbought extremes

All of these conditions were present.

Why This Matters for Natural Gas Traders

A shooting star after a blow-off top isn’t just a soft warning—it often marks a pivot from euphoria to distribution. Historically, similar setups lead to:

• Sharp mean-reversion pullbacks
• A resetting of speculative positioning
• Choppy to lower prices as the market digests the reversal

The combination of overextended price action, failed highs, and a broken trend line substantially raises the odds of a multi-session correction.

Key Levels to Watch

While specific levels may vary based on your charting system, here are the structural markers traders should closely monitor:

• High of the wick: A break back above that intraday peak would invalidate the shooting star.
• First support zone: Typically the last consolidation shelf beneath the trend.
• Volume behavior: Increasing volume on down days confirms distribution is underway.
• Natural gas seasonality: Late-winter rallies often fail once the market shifts from weather risk to storage trajectories.

Bottom Line

Natural gas may have just completed a textbook reversal: a blow-off top, a break of the rising trend line, and a multi-session shooting star. This constellation of signals is one of the strongest bearish technical combinations in commodity trading. While the longer-term narrative for natural gas remains driven by weather, storage, and structural demand, the short-term technical picture has shifted sharply. Traders should be prepared for heightened volatility and the potential for a deeper pullback as the market digests the recent euphoric rally.

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Darren Carlat

Dual Edge Research

(214) 636-3133

DualEdgeResearch@gamil.com

www.BullStrangle.com

Disclaimer

This information is for informational purposes only and should not be considered as investment advice. Past performance is not indicative of future results, and all investments carry inherent risk. Consult with a financial advisor before making any investment decisions.