Short-term Series of Lower Swing Highs

Yesterday’s high was the second lower swing high that has occurred since a bearish reversal followed the 4.37 trend high from last week. The day ended down and today’s drop below yesterday’s low of 3.86 earlier in the trading session marked it has a swing high.

There is a possibility that the lower swing high is retained and the developing small downtrend (countertrend decline) of lower swing highs may be setting the stage for a deeper correction. However, today’s bullish price action following a successful test of support at the 20-Day line and possibility of a strong close, leaves open the prospect of a continuation of Wednesday’s bounce off support at the 20-Day MA

Bullish Above 4.05

On the upside, a breakout above the 4.05 swing high will trigger a continuation of the bull advance from Wednesday’s low of 3.71. That low was also a higher swing low and now part of the price structure of the uptrend, which is also near support represented by the uptrend line.

The 61.8% Fibonacci retracement, where resistance might be seen, is at 4.09 and it is followed by the 78.6% retracement at 4.20. Moreover, there are two additional potential resistance areas. There is also a monthly high at 4.20, which provides confirmation for that price level as it matches the Fibonacci level.

Bearish Below 3.71

Outlook turns bearish if there is a drop below this week’s low at 3.71 as it is key trend support of a higher swing low. However, there is an identified potential support zone from around 3.70 and 3.64, which could either hold and lead to a bullish reversal, or natural gas breaks down through the zone and heads lower towards 3.53 or so.