Signs of Weakening

That was the second day since the 20-Day MA was reclaimed on October 29 that there has been a daily close below the 20-Day line. The first was three days ago, which generated a higher swing low (B). In addition, Tuesday’s bearish reversal day generated a lower swing high (C). These are signs of weakening that might lead to something or not.

Support at 3.43 and Resistance at 3.74

Support was successfully tested again today around the trendline and the price area showed support. Thereafter, buyers took back control shortly after the opening on Wednesday. Natural gas is on track to close strong, in the upper third of the day’s price range, at the time of this writing. It continues to trade near the high, which was 3.68. The low for the day is 3.43, a match with Tuesday.

Therefore, 3.43 provides a specific price support level to watch, which is needed to confirm price behavior around the trendline. A drop below 3.43 would follow another decline below the 20-Day MA, which is now at 3.54, and the trendline. This leaves 3.43 as a key short-term price level, as a drop below it may lead to a continuation of the bearish trend with a drop below the recent swing low at (B).

Bullish on Rise Above 3.74

On the upside, a lower swing high was generated yesterday following the day’s high of 3.74. Subsequently, sellers took back control, leading to a bearish reversal day and a weak close near the lows of the day and the trendline. Natural gas remains at risk of further downside unless there is a decisive advance above 3.74. That would trigger a bullish trend continuation signal and eliminate the lower swing high.

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