False Breakdown Context

Tuesday’s decline was confirmed with a daily close below both dynamic trend indicators, but Wednesday’s swift response turned it into a potential false breakdown. The completion of the key Fibonacci retracement, together with this quick reclaim, suggests a counter-trend rally may have started. Tuesday marked the seventh consecutive day of lower daily highs and lows that followed a minor three-year high of $5.02 reached earlier this month.

Prior Breakdown Recap

The 50-day average was broken a week ago Tuesday, followed by a drop through the lower trendline of a rising channel that accelerated the decline to the 200-day average. Sharp moves commonly follow failed breakouts, and the rapid recovery on Wednesday fits that classic pattern.

Short-Term Resistance Cluster

The most obvious potential resistance zone if natural gas continues strengthening short-term spans from a November swing low of $4.09 up to the 50% retracement at $4.32. Included within that band is the 50-day average at $4.26 currently, while the falling 20-day average at $4.34 will soon enter the range. The 38.2% Fibonacci retracement also sits inside at $4.15. A swing back to test prior support areas as resistance is a natural progression following the breakdown of an advancing trend channel.

Confirmation Levels

Key near-term support now rests at Wednesday’s low of $3.69; a drop below shows weakness rather than additional strength. A rally above Monday’s high of $3.92 further confirms the bullish reversal and raises odds that the higher resistance zone gets tested on this bounce.

Outlook

Natural gas has flipped from a confirmed breakdown of the 200-day average with Tuesday’s close below the average, to a potential false breakdown with the rapid reclaim of the 200-day average and trendline off the 61.8% Fib completion. Hold $3.69 and push above $3.92 to target $4.09–$4.32; failure to defend current lows re-exposes deeper correction, while the counter-trend rally case stays favored until proven otherwise.

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