Sellers Remain in Control
Until there is at least an initial sign of a potential bottom or a low, the trend can be expected to continue. If today’s low is busted to the downside and natural gas keeps falling, then the 1.49 price zone is the next area of interest for potential buyers. That is where the 127.2% Fibonacci extended retracement completes. Further below there is the 28-year low.
A decisive rally above today’s high of 1.58 would provide the first sign of strength that may see further upside in prices. Once a new low is found that leads to a bullish reversal the subsequent advance could be sharp. That is given the fact that the price of natural gas was down as much as 55.5% today in only 25 days. Measured from the secondary high from January 25, it had declined by 47.5% in 17 days. Further, the drop seen from the high of the gap down day on January 29 is 29.7% in only 15 days.
Trend Resistance Levels Potential Upside Targets
Let us now consider a couple trend indicators as possible upside targets once a rally begins. The 8-Day MA (green) marks dynamic resistance of the downtrend in the short-term. Until natural gas gets above the line the short-term and longer-term trends are all down. It is currently at a price of 1.69. A rally above 1.69 would put natural gas at a five-day high and provide a good start to a potential bounce. The purple 20-Day MA has recently converged with the shorter downtrend line, and they are both identifying a similar price zone. It is currently 2.02. Interestingly, the long-term downtrend line is also currently identifying that price area as well.
For a look at all of today’s economic events, check out our economic calendar.
