Small Consolidation Channel Forms

Notice that a downward sloping consolidation pattern formed recently, showing a small descending channel. Given its location further into a downtrend and at a key long-term support zone, this pattern might have an impact like a bullish falling wedge. It is too early to say but something to watch as it could help identify a potential bullish reversal signal. Currently, a bullish reversal would be indicated on a rally above Friday’s high of $3.13. While a rise above Monday’s high of $3.08 will show strength, not enough to indicate that the advance might be sustainable.

Price Will Show the Way

The more fight there is between buyers and sellers near the bottom, the greater the potential for a reversal when it comes. Although there are lower targets for natural gas that might be reached, if a low was going to be established, it is in the area to do it. The AVWAP line shows $2.97, and it should be seen as an area of price. If a bullish reversal follows before a new trend low, then a new high swing low will be completed. That would be a bullish sign if it occurs.

AVWAP Has a History of Support

A swing low from April at $2.86 found support and reversed from the AVWAP line. That low is also a monthly low and confirmed by a 20-Month MA, now at $2.85. Therefore, it is potentially significant, either for a bullish reversal or a breakdown. Either way, if $2.86 is approached, a breakdown from two long-term trend indicators will be violated. That would indicate the potential for further downward pressure in prices.

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