Stuck Between Moving Averages

Nonetheless, today’s price action leaves natural gas sandwiched between resistance around the 20-Day MA, now at $4.13, and the 50-Day MA at $3.88. An advance from current prices heads up into potential resistance around the 20-Day line and the recent interim swing high at $4.26. Natural gas remains in a clear downtrend.

Given today’s new bearish continuation signal, which confirms on a daily close below the prior low of $3.96, rallies will be heading into potential resistance levels until there starts to be solid signs of a bullish reversal. As it stands, that would start to happen on a sustained rally above the 20-Day MA and then an advance above the lower swing low at $4.26, which is the high for this week.

Weekly Bearish Signal

The significance of Friday’s bearish trend continuation increases when considering the weekly chart (not shown). That is because a bearish reversal on the weekly chart triggered today at $4.955. Therefore, it reflects added downward pressure. A daily close today below $3.955 will confirm the bearish signal on the weekly time frame. If that happens, the chance for a drop through the 50-Day line increases. And that could lead to a drop below the recent interim swing low at $3.74.

Lower Price Levels

Price areas to watch for potential support include the prior swing low, the 61.8% Fibonacci retracement level at $3.72, and a prior resistance level that may now show support at $3.64. Further down is an early target for a falling ABCD pattern. Instead of targeting 100% price symmetry between the two downswings, labeled AB and CD, this earlier level looks for an initial target in the CD leg of the decline at 78.6% of the price decline in the AB leg.

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