Weekly Range Defines Key Parameters

Last week’s price range is relatively large, from 2.075 to 2.29 and natural gas could trade within that range all this week. Nevertheless, it marks the key near-term support and resistance levels. In addition, the 2.29 price level should be used along with 2.30. The 2.30 level is more significant as it marks the breakout level of the double bottom. Also, notice that the 50% retracement is near last week’s low at 2.085.

Pullback May Test Lower Prices

Natural gas showed signs of strength last week that should be followed by further strength, unless negated. On Friday, it was able to close above the 200-Day MA, currently at 2.255, for the first time since July 1. But today, natural gas has fallen back below the 200-Day line. In addition, last week completed a measured move relative to the most recent prior upswing, which is from the rally off the first recent bottom at 1.88. The rally off that low was 22.3%, and the current advance completed a 22.4% rally from the second bottom, as of last week’s high. It adds to the potential for resistance around the 2.29/2.30 price zone.

Key Near-Term Support at 2.075

If natural gas continues to weaken but stays above last week’s low, it will continue to be poised for an upside breakout of the double bottom pattern. A drop below 2.075 may increase the time for a retracement to occur and could put at risk the potential double bottom pattern. A bullish reversal on the weekly chart was triggered last week and it indicates a likely continuation higher. That may change though if the 2.075 level is broken to the downside.

An upside bullish breakout of the double bottom will trigger on a move above 2.30. It will then need to close above it to confirm the strength of the breakout. There will then be the potential for natural gas to test resistance around the top trendline, which is near the 78.6% retracement at 2.89. Lower price targets are marked on the enclosed chart.

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