Support at 50% Retracement

Today’s low almost reached the prior trend high from September 17. That high was 2.44, close to the 50% retracement level at 2.45. Given the intraday bullish reaction, today’s low could hold and lead to a continuation of the bounce and therefore mark a possible completion of the retracement. If it does, the next sign of strength would be a rally above today’s high of 2.55.

Natural gas would then be heading up into resistance zone starting around the prior retracement low of 2.59. Further, the 20-Day MA, now at 2.68, also marks a potential key resistance area and it has converged with the internal uptrend line. It also points to the prior trend high and beginning of a gap at 2.67.

Break of 20-Day MA, Points to 50-Day Line

Nonetheless, a breakdown of the near-term trend was indicated yesterday as natural gas fell below the uptrend line and further below the 20-Day MA. The 20-Day line was broken and confirmed with a daily close below the line on Friday. Since the 20-Day MA was broken it opens the door to the possibility of reaching the 50-Day MA. The 50-Day line is now at 2.38.

It sits between two retracement levels. The first price level was reached today at the 50% retracement, and the next potential lower target would be the 61.8% Fibonacci retracement at 2.31. A little below the 2.31 level is the 200-Day MA at 2.52 currently.

Symmetrical Triangle Progresses

Given the natural gas continues to trade inside a consolidation pattern in the form of a large symmetrical triangle the chance for further downside and choppy moves seems possible. The top side of the pattern was hit early this month leading to the current retracement. Therefore, a swing to the other side of the pattern, the bottom, remains a possibility.

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