Retest of 20-Day MA Support Looks Likely

It looks like a test of the 20-Day MA may be in process. The 20-Day line, now at 3.19, was reclaimed on Tuesday with a bullish doji hammer candlestick pattern. So, this pullback will be the first real test of support around the 20-Day line since natural gas rose away from the line three days ago. Therefore, it should reject price to the upside. Keep in mind though that there were four days near the recent lows where trading occurred below the 20-Day line, then quickly recovered. That could happen again on this test.

Close Below 3.28 Would Fail to Confirm Weekly Breakout

An important observation to consider is indicated in the weekly chart (not shown). There was a bullish weekly reversal that triggered above last week’s high of 3.28 earlier this week. The high for the week was 3.56 and the low was 3.07. However, given today’s pullback and where natural gas is now trading, there is a risk that the weekly breakout will not be confirmed with a weekly close above last week’s high. Something to look at as a close below the high could be interpreted as another bearish indication that could lead to a longer recovery before natural gas is once again ready to test recent highs.

Traded Inside Month

Moreover, on the monthly chart (not shown), trading in December has been confined within November’s trading range. Might this month end with an inside month? There is a slight upward bias indicated as this month’s price range is contained within the upper half of November’s range and the high was a direct test of the prior high. But given the failure to break out to new highs yesterday and today’s bearish response, this may be indicating the next test of highs may not occur until next month.

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