Persistent Decline

Certainly, an argument can be made that the selling is overdone and that a bounce is overdue. However, as it looks now, the week may end with a fourth consecutive weekly wide range red candle with a close near the low of the week’s trading range. This shows sellers dominating to the end of the session and therefore they may continue to do so heading into next week.

There is still time for that to change, but not much, especially given the lower activity levels due to the Independence Day holiday in the United States. If this scenario is correct, then the price of natural gas remains at risk of testing the next lower target zone before a notable bounce.

Possible Support Zone Reached

Nonetheless, the retracement low of 2.335 completed a falling ABCD pattern and is shown on the chart. Once price symmetry between the AB and CD legs of the pattern match, or are close to each other, a potential pivot level has been identified. That could lead to a reversal as either support or resistance shows up, depending on the direction of the pattern. Or a breakout through the price area and a continuation of the trend triggers instead.

For natural gas, the current retracement low completed the initial target for the ABCD pattern. Also, a 50% trend retracement was completed during the decline at 2.37. Together, the two price levels can be watched as a support zone. So far, that is the case but there is little indication that the support zone can do more than slow the descent. Natural gas fell below the 200-Day MA two days ago and it continues to fall. This is bearish behavior.

Lower Support Looks Like 2.23

A decisive drop below 2.335 could lead to a decline to the next lower potential support zone from around 2.23 to 2.18. The 61.8% Fibonacci retracement is at 2.18, while an extended lower target for the ABCD pattern completes at 2.20. A prior swing ow at 2.23 begins the support zone.

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