Nevertheless, today’s range is relatively shorter than the daily trading ranges of the past four days. Along with the doji, it is reflecting a shift in momentum. Despite bearish indications, natural gas may signal a bottom upon a decisive rally above today’s high of 3.08. It will then have to contend with potential overhead resistance around the 200 Day EMA at 3.18.
50-Day EMA Support at Risk
As stated in previous articles, the 50-Day EMA provides a key near term level that helps define the boundaries of the developing internal uptrend. The initial uptrend can be defined by the lower rising trendline that starts from the April lows, while the internal uptrend has a higher slope with a trendline starting from the September 26 low. As the 50-Day line converged with the trendline around the last swing low (C). That should have the effect of increasing the chance that either or both the lines will identify support.
Lower Levels if Price Continues to Fall
Nevertheless, a decline to below today’s low of 2.99 will likely lead to gold encountering the next lower support zone from 2.90 to 2.86. Last month’s low will also be close by at 2.82. Depending on if and when it is reached will determine whether the lower rising channel line will be touched following a drop below 2.86. This lower zone might be hit when the rising line is close to the support zone just noted.
Potential Symmetry with Prior Correction
It is interesting to note that there is symmetry possible with the last correction. Gold fell by 17.6% in 10 days from the October swing high (B) to the bottom of the correction. The current retracement has seen price correct by 17.9% in 10 days. This is a potential match in both time and price, if a rally follows today’s low.
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