Nonetheless, a continuation of the decline will be signaled by a drop below Thursday’s low. That would put natural gas on track to reach the next lower target zone near the 78.6% Fibonacci retracement of the prior advance at $2.69. From there, a rebound or consolidation could develop, as the potential counter-trend rally would have more room to unfold after a deeper decline.

Recovery Faces Resistance

Otherwise, if signs of support continue near the current price zone, there remains a chance for an upside move towards the higher swing low at $3.02 and the 50-day moving average at approximately $3.09. The 50-day moving average appears to be the more useful trend indicator given the recent trend structure. It clearly failed as support last week as natural gas fell sharply. Therefore, there is a good chance it will act as dynamic resistance, at least during the first leg up of any recovery.

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