Resistance Zone Includes HS Neckline

Resistance was seen near recent highs that are marked by several indicators that converged around a price zone. If the price of natural gas was going to pullback further from recent highs, now would be the time to do it. It is important to recognize that since the April 24 swing low of $2.86, there have been only two previous pullbacks of one day each. Anything more than one day pullback would be a change in that pattern and possibly an indication of a slowdown in bullish momentum.

Sharp Rally Hits Turbulence?

As of yesterday’s high, of $3.84, the price of natural gas had risen by $0.98 or 34.4% in only 12 days. Since a significant potential resistance zone has been reached a deeper bearish pullback would not be a surprise. If an advance above this week’s high is to be sustained, a period of consolidation or larger pullback could provide preparation time for demand to build.

Initial Downside $3.47

The 38.2% Fibonacci retracement is at $3.47 and provides an initial downside target. And it can be considered along with a prior pullback low of $3.42. That low is part of the price structure of the near-term uptrend. Therefore, it has some significance, particularly if it fails to hold as support. The potentially significant support area around the 20-Day MA is now at $3.37 and is the next lower target if $3.42 fails to hold.

For a look at all of today’s economic events, check out our economic calendar.