Weakness Persists

Also, potential support around the near-term uptrend line was breached today. This was another minor item, but it could be an early clue to falling demand that would require further evidence. Recognize that a failed breakout to new highs was established with last week’s high of 3.56. Clearly there is resistance around that price level as it also led to a bearish reversal from the first high on November 22.

Therefore, if natural gas is going to have a possibility of breaking out above the 3.56 highs prior to a sustained decline below the 20-Day MA, demand needs to be strong enough to do it. If demand is not strong enough to facilitate a new high breakout, then consolidation near the highs is possible or another decline to below the 20-Day MA. This is why small clues related to supply and demand could help to better prepare for the next moves.

Consolidation Looks Possible

It looks like there is a chance that this week may be largely consolidation type price action given the weekly pattern. Last week’s price range was from 3.07 to 3.56. The week triggered a bearish reversal as natural gas exceeded the previous week’s high of 3.28. However, the close could have been stronger as it was 3.27, below the prior week’s high. For the week the price range was relatively large. Therefore, we could see an inside week this week, in preparation for another attempt at new highs. A scenario to consider.

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