Buyers Show Interest

Today’s low was just shy of reaching of potential support zone for around 2.23 to 2.17. Nonetheless, a likely strong daily close and a key reversal day shows buyers stepping up. That may lead to a bullish retracement to test potential areas of resistance. If natural gas stays within the downtrend (retracement) price structure following a bounce, a test of the lows and possibly the slightly lower support zone may yet occur.

Resistance Zone from 2.45 to 2.475

A key price zone to watch for resistance is around the 200-Day MA, which is now at 2.46. That moving average can be watched together with the previous swing low of 2.475 as they are close to each other. Moreover, the most recent minor swing high of 2.45 is a little lower than the 200-Day line. It has some significance as it was the first day in eight days down that exceeded the previous day’s high.

An advance above 2.45 improves the chance that natural gas can challenge resistance around the 200-Day MA. It would show strength as the 2.45 swing high makes up part of the downtrend price structure of lower swing highs and lower swing lows. A daily close above the price level would confirm strength and improve the chance for a continuation higher. The next higher potential resistance zone looks to be from the 50-Day MA at 2.56 and up to the 20-Day MA at 2.59.

Higher Target Goes From 2.56 to 2.59

Notice that the 50-Day line continues to rise, and it is approaching the 20-Day line. Also, the 20-Day line is falling and has converged with the 38.2% Fibonacci retracement at 2.60. In general, in Fibonacci analysis, a minimum retracement to at least the 38.2% retracement is common. On June 28 support was found around the same price area as the 38.2% retracement. However, that support level didn’t last long as the next day natural gas continued to fall. A downtrend line for the current decline has been added to the chart to provide additional guidance during an advance.

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