Uptrend Remains Intact

The uptrend in natural gas remains intact with a rising trendline providing guidance for dynamic support below the 20-Day line. It is currently near a possible support zone from 3.67 to 3.64 or so. Notice how the trendline rises through that price zone is looking directly below today’s price action on the chart. A decisive drop below 3.64 could lead to still lower prices.

That would trigger a breakdown below the trendline and a daily close below the line would be needed to confirm the bearish implications. If this occurs, then there are two lower price levels that identify potential support. The first is the completion of a 61.8% Fibonacci retracement at 3.51.

50-Day MA Marks Lower Support

Nonetheless, it looks like there is a potentially more significant price level around the prior swing high of 3.39 as two indicators point to that price area. Notice that the 50-Day MA has just recaptured the 3.39 price level to arrive at 3.40. If the price area around the 50-Day line fails to provide support that leads to a bullish reversal, lower levels may be tested. Certainly, a full retracement back to the breakout area of a large symmetrical triangle at 3.02 looks possible if the bears take back control.

Bounce Looks Possible

A decisive breakout above today’s high will signal strength after buyers took back control following the low of 3.76. Regardless, a continuation of that strength might be difficult given recent signs of a short-term top. Last week a new trend high of 4.37 was met with a reversal day and a weak close. A second high was then generated last Thursday at 4.33. That sets up a potential falling ABCD pattern (not shown) with an initial target at 3.70. Notice that is very close to the 50% retracement.

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