Bearish Weekly Signal Dominates

Last week natural gas reached a new trend high of 3.16 before sellers took back control and drove the price back down. Subsequently, a bearish weekly signal triggered earlier this week that is certainly following through to the downside as trading continues near the lows of the week. If 2.70 support breaks, the 200-Day MA at 2.47 may be tested quickly.

It can be considered along with the most recent swing low of 2.475. A 38.2% Fibonacci retracement completes at 2.55. Given the bearish weekly pattern a lower price zone around 2.37 could also be approached. That would follow a bearish drop through the 200-Day MA, however. It comes from the convergence of the 50-Day MA and the 50% retracement level of the full rally off the April swing low.

Upside Breakout Above 2.77 Could Lead Higher

Nonetheless, it remains possible that a bullish reversal signal is given on Monday on a move above today’s high of 2.77. That price level coincides with the 20-Day MA at 2.78. The 20-Day line would also need to be taken out for a more reliable indication of strength. The 20-Day line was tested as resistance earlier in today’s session and the price of natural gas was rejected to the downside.

This behavior indicates that the market recognizes the price area of the 20-Day MA. Notice that on Monday and Tuesday it was clearly showing an area of support. Today’s successful test of the line as resistance sets of a continuation of the retracement to lower price zones. But, at stated above, that may start to change on a breakout above 2.77.

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