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Prepped for Bearish Continuation
The high for the day at $3.45 essentially tested prior support as resistance as a minor interim higher swing low was at $3.42. Notice that a falling trendline has been added to the chart from the recent peak in March. Along with the 61.8% retracement level, it may provide an additional guide as it previously represented resistance. It is interesting to note that on Monday the trendline and 61.8% level are converged.
In other words, they mark the same price area on Monday. When two or more indicators mark a similar price area, it has the potential to do two things. One, it can act like a magnet pulling price towards it. And second, it marks a potentially more significant price level. Therefore, it increases the chance for a bullish reversal and the potential selling pressure that could be unleashed if it doesn’t hold as support.
Weekly Bearish Reversal Confirms Selling Pressure
A bearish reversal on the weekly chart triggered on Thursday, with the breakdown confirming today with a likely weekly closing price below $3.42. That is another piece of evidence for the bearish side of the outlook. It increases the chance that natural gas will reach the 61.8% level, and that it could go lower. The 78.6% retracement is the next lower price level at $3.07.
Above $3.45 Could See Higher Bounce
On the upside, a decisive rally above today’s high of $3.45 would show strength and indicate that today’s low may have completed the retracement. Or it is just a bounce before a continuation lower. Resistance from Thursday is at $3.50 and it is confirmed by a potential AVWAP resistance level calculated from the March peak.
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