Drop Below 4-Week Support

On a weekly basis, this week’s decline put the price of natural gas at a four-week low, confirming a bearish reversal following last week’s trend high of $4.15. The decline below the lower uptrend line shows the potential for a bearish continuation as the current uptrend shows early signs of possible failure. However, there is also a good chance that support will be seen around the 200-Day MA and lead to a bullish reversal. Today is the fourth consecutive day of declines and bearish momentum started near last week’s high. So, there is a chance that selling momentum will decline. Although there is no sign of it yet.

Measured Move Support Completion of Correction

It is also interesting to note that the prior bearish correction that followed the initial rally from the April swing low saw the price of natural gas decline by $0.74 (or 19.3%). That puts the current decline close to a match as it has led to a drop of as much as $0.78 (or 18.9%). When comparing price, the current decline exceeded the previous decline, but natural gas is now very close to matching on a percentage basis. Once there are similar swings, there is the potential for support to be seen.

Weekly Closing to Provide Clue

Since there are only two more trading days for the week, there is a risk that natural gas confirms the recent bearish signals on a weekly basis. As noted above, support for the past several weeks was broken this week. The lower and therefore more significant weekly low was at $3.45, while last week’s low was $3.63.

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