Natural gas remains under pressure below the 20-Day MA, with key support at $3.93 and $3.88. A breakout above $4.09 could shift the trend bullish.
Natural gas consolidated just below the 20-Day MA on Wednesday, and it is on course to end the trading session as an inside day. Although the day was up from Tuesday’s closing price, the high of the day at $4.09 found resistance at the 20-Day MA, now at $4.08. That high established a lower daily high, reflecting downward pressure. It has short-term bearish implications that may be amplified by the fact that the 20-Day MA was also near.
Support for the past two days at $3.93 is near the prior interim swing low from mid-March. Moreover, a 61.8% Fibonacci retracement also was completed. However, given today’s lower daily high and the fact that the 20-Day MA has turned down, the next lower potential support level around the 50-Day MA, looks likely to be tested. It is now at $3.88. The 50-Day line is joined by the 78.6% retracement level at $3.84. That price level has added significance as it is this week’s low so far. It begins a pattern of higher weekly lows following the bullish reversal that triggered earlier this week on the weekly chart (not shown).
This means that the weekly chart just began a new potential upswing this week. Therefore, the bias should be towards the upside. However, that doesn’t mean that the current pullback can’t go lower first. But as long as natural gas remains above this week’s low, it retains the weekly bull trend price structure. If there is a sustained reclaim of the 20-Day MA and today’s high prior to a deeper decline, then the near-term outlook would switch to bullish.
The first advance off the recent higher swing low of $3.73 retraced a little less than 50% of the recent downswing. Therefore, the 50% retracement at $4.32 would mark an upside target, along with the interim swing high at $4.37. Further up is the 61.8% Fibonacci retracement level at $4.45. A daily close above today’s high and the 20-Day MA would indicate strength that could then lead to a bullish breakout above the recent swing high at $4.25. It is also possible that natural gas consolidates for a little while and takes a rest by moving relatively sideways.
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With over 20 years of experience in financial markets, Bruce is a seasoned finance MBA and CMT® charter holder. Having worked as head of trading strategy at hedge funds and a corporate advisor for trading firms, Bruce shares his expertise in futures to retail investors, providing actionable insights through both technical and fundamental analyses.