Reversal from 200-Day MA Support Confirmed

The recent bearish correction provided a successful test of dynamic support at the 200-Day MA. A new higher swing low was established today, which confirms support at the 200-Day MA. On a relative basis, the recent pullback showed underlying strength as the price of natural gas was rejected at the 200-Day line, while the prior two tests of the line failed initially to show support. Confirming the support area is the 61.8% Fibonacci retracement level at $3.35.

New Trend High Potential

Today’s bullish reversal has the potential to lead to a new trend high above $4.15. A rising trend channel looks supportive of the potential for a target zone from $4.35 to $4.37 to eventually be reached. In addition, the 78.6% Fibonacci retracement is a little higher at $4.46. However, the next price level to watch is a prior swing high at $3.84. A sustained breakout above that level opens the door to challenging and likely exceeding the $4.15 interim trend high.

Short-term Weakness Should Resolve to Upside

Given the bullish implications for the price of natural gas, short-term pullbacks will likely be used to accumulate, as traders anticipate the impact of the uptrend aligned on all time frames. The bullish trend channel shows a minimum potential upside. Once price bounces off one side of a channel there is the potential for it to eventually reach the other side. Notice that the top parallel line is confirmed with points. Very short-term support may be seen around the 20-Day MA and Thursday’s high of $3.60. Regardless, the chance for the above bullish scenario weakens if there is a drop below today’s low of $3.51.

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