200-Day MA is Key

Nonetheless, the 200-Day MA is a little lower than the 61.8% retracement at 2.25. Therefore, there is a chance it will be tested as support before the current retracement completes. The recent rally following the initial double bottom breakout accelerated following the first test of support at the 200-Day line.

A breakout of the 200-Day line that triggered on September 11, a day before the double bottom triggered. The current decline would be the first larger swing test of support around the 200-Day line. If natural gas can continue to hold above the 200-Day line following the correction it has a chance to eventually test the top trendline again and possibly break through it. That’s the bigger picture.

Holding Around Support of 50-Day MA

Alternatively, since support is being seen around the 50-Day MA today, although there are no signs yet of buyers stepping up to lead to a bullish reversal, it is a potential area of interest. It could lead to a bounce if today’s low is not broken. As of today’s low, the price of natural gas has corrected by 21.9% from the 3.02 swing high.

Remains Inside Large Symmetrical Triangle Pattern

Since natural gas has been trading inside a developing large symmetrical triangle pattern there is a risk it continues to decline to eventually test support around the bottom boundary line of the pattern. For now, the 78.6% retracement level at 2.12 can be used as a proxy for the lower trendline. Note that the bottom line of the triangle was redrawn after the August 27 low that created the second bottom of the double bottom pattern.

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