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As noted in prior articles, price action in natural gas since the January 31 swing low at $2.99 has been contained within last week\u2019s price range. Last week ended with a wide range red candlestick pattern. Trading inside that range can lead to price behavior like what is seen inside a consolidation range. Choppy price action with unreliable follow-through is common. Therefore, it can be helpful to know what patterns are forming and evolving and the key price levels to pay attention to.<\/p>\n
In the near-term, natural gas is in the process of advancing from the $2.99 swing low. Since then, it has formed a small rising ABCD pattern (light blue) as Thursday\u2019s high generated a higher swing high (above B) and therefore a bullish trend continuation signal. Despite today\u2019s bearish performance, if natural gas stays above the interim swing low at $3.16 the price structure of the ABCD pattern remains intact and a continuation higher is anticipated. That expectation would change on a drop below $3.16 as that would violate the integrity of the ABCD pattern of higher swing highs and higher swing lows.<\/p>\n
An initial upside target from the pattern points to $3.58. That is in the middle between two of the major moving averages. The 50-Day MA is at $3.52 and the 20-Day is at 3.65. Each line previously identified trend support, following the upside gap on October 29. During the subsequent advance the 50-Day line did a better job of holding as support until it was broken during the sharp drop on January 28. Therefore, it presents a potentially more significant price area, and it could stop an advance and lead to a bearish reversal. Watch and observe the behavior of natural gas around the 50-Day line, with this possibility in mind.<\/p>\n
For a look at all of today\u2019s economic events, check out our\u00a0economic calendar<\/a>. <\/b><\/p>\n<\/div>\n