Support at Risk

Support for the past two days at $3.93 is near the prior interim swing low from mid-March. Moreover, a 61.8% Fibonacci retracement also was completed. However, given today’s lower daily high and the fact that the 20-Day MA has turned down, the next lower potential support level around the 50-Day MA, looks likely to be tested. It is now at $3.88. The 50-Day line is joined by the 78.6% retracement level at $3.84. That price level has added significance as it is this week’s low so far. It begins a pattern of higher weekly lows following the bullish reversal that triggered earlier this week on the weekly chart (not shown).

Weekly Bullish Pattern Retained

This means that the weekly chart just began a new potential upswing this week. Therefore, the bias should be towards the upside. However, that doesn’t mean that the current pullback can’t go lower first. But as long as natural gas remains above this week’s low, it retains the weekly bull trend price structure. If there is a sustained reclaim of the 20-Day MA and today’s high prior to a deeper decline, then the near-term outlook would switch to bullish.

Upside Targets

The first advance off the recent higher swing low of $3.73 retraced a little less than 50% of the recent downswing. Therefore, the 50% retracement at $4.32 would mark an upside target, along with the interim swing high at $4.37. Further up is the 61.8% Fibonacci retracement level at $4.45. A daily close above today’s high and the 20-Day MA would indicate strength that could then lead to a bullish breakout above the recent swing high at $4.25. It is also possible that natural gas consolidates for a little while and takes a rest by moving relatively sideways.

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