Bearish Momentum Dominates

Trading continues near the lows of the day at the time of this writing and natural gas looks poised to close in the lower third of the day’s trading range. Currently, the low for the day is $3.31. Monday’s session began with a brief rally above Friday’s high to a high of $3.61. A retest of resistance around the center line of a falling parallel trend channel occurred before sellers took back control. A bearish outside day subsequently formed as Friday’s low was busted. Furthermore, the lower line of the descending parallel channel has also failed to hold as support.

Test of 200-Day Moving Average Likely

This puts natural gas in a position to possibly test support around the 200-Day MA, now at $3.05. There are several other indicators pointing out that price zone as possible support. A falling ABCD pattern completes at $3.08, while a 61.8% Fibonacci retracement level is at $3.03, coinciding with support from the January 31 swing low at $2.99. In addition, a breakout of a symmetrical triangle pattern triggered on a move above $3.02 in November. Therefore, along with the last-January swing low, the current decline may provide a retest of that breakout zone.

Multiple Signs of Support Around $3.05

The 200-Day MA was last reclaimed in September of last year and that was followed by a successful test of the line as support later in October. Since then, the price of natural gas has not approached the 200-Day line. Therefore, given the indicator confluence around the 200-Day line, the expectation is for support to be seen. Moreover, although a decline below the line is a bearish sign. Natural gas has been falling since a high of $4.90 and it may run out of bearish momentum by the time it tests the 200-Day MA.

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