Persistent Downward Pressure Under Broken Uptrend
Natural gas continues to face downward pressure near a long-term uptrend line that was broken to the downside on February 17. It reached a four-day high of $3.32 on Friday before pulling back to a low of $3.11 and establishing a bearish outside day. This puts near-term support at the 10-day moving average of $3.08 and the 20-day average at $3.03.
A small higher swing low at $2.96 is a key structural level within a short-term bull trend that was established after the $2.76 trend low from February. Bullish short-term momentum was recently confirmed by the 10-day average crossing above the 20-day average, yet price continues to struggle beneath the previously broken uptrend line, reinforcing the immediate downside pressure noted at the start of this analysis.
Monday Spike Meets Resistance
A bullish spike on Monday found resistance at $3.49, before sellers took control and drove price to the bottom of the day’s range, signaling a failure of the day’s upside continuation. Now, the 50-day moving average is at $3.50 and will soon fall below Monday’s high, thereby lowering the next resistance zone for current prices. If natural gas can get above Friday’s high of $3.32, it will have a chance to test resistance at the 50-day average or near Monday’s high. That high would need to be recovered before there are clear signs that price may keep rising from there.
Potential Bounce Within Large Trend Channel
Despite continued downward pressure, there remains a chance that a rally back into a large rising trend channel may occur before a continuation of the bearish trend triggers below $2.76. Two other resistance levels to be aware of are the 200-day moving average at $3.42 and a lower swing high at $3.49. An advance above this week’s high will trigger a continuation of the bounce, while a rally above $3.49 will signal a bullish trend reversal above a lower swing high within the current downtrend structure.
Upside Target Zone if Reversal Occurs
If a bullish reversal can trigger, then a price zone from $4.26 to $4.59 marks the next upside target zone. Included in the zone is the 38.2% Fibonacci retracement of the recent downswing at $4.56. Also, the center line for a large trend channel is nearby, potentially adding another layer of resistance within that target zone.
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