Strength Confirmed Above 2.95

Today’s price behavior reiterates the importance of natural gas getting above the most recent swing high of 2.95, also a weekly high, before buyers start to get more aggressive. Until then, resistance could be seen that takes natural gas down to again test support at this week’s low of 2.635, and possibly lower. There remains a series of lower swing highs and lower lows until the 2.95 high is breached.

Retracement Likely Complete

Nonetheless, there are reasons to believe that the 2.635 low from Monday may be the end of the retracement. It completed a 78.6% Fibonacci retracement (2.62), and yesterday’s strong bullish reversal ended with a key reversal day (open below prior day, close above prior day). The key reversal day reflects a shift in sentiment in only one day, from the sellers being in charge to the buyers taking back control of price action. Yesterday’s swing low also set up a measured move. The measured move is reflected in a rising ABCD pattern shown on the chart.

Initial Upside Target of 3.32

The second move or CD leg of the pattern has the potential to at least match the price appreciation seen in the first move or AB leg up. Price symmetry is reflected when the two swings match. It completes an initial target at 3.32. Once symmetry is present between the swings, a potentially significant pivot level has been identified. Either price breaks out above the pivot zone, or it behaves as resistance and a pullback ensues. Also, a choppy relatively sideways pattern could develop as well around the pivot point.

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