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Notice that the high for today at $4.14 successfully tested resistance at both the 20-Day MA and trendline as they have converged to identify a very similar price resistance area. Having the two lines converge may increase the significance of the resistance zone. Since the behavior of natural gas after the breakdown earlier in the week is confirming a weaking decline, the bearish pullback can be anticipated to continue unless upside resistance price levels are reclaimed. If you\u2019ve been reading this column, you\u2019ll remember that sharp price movements often follow a pullback to test the 20-Day MA first.<\/p>\n
On the upside, Friday\u2019s high was at $4.14 at the time of this writing, and the 20-Day line is at $4.15. A rise above the 20-Day line would be a sign of strength. But given the current price pattern an advance above Thursday\u2019s high of $4.20 should offer a more reliable indication of strength. Wednesday\u2019s high of $4.38 would provide an initial upside target.<\/p>\n
This week is on track to complete a bearish candlestick pattern following a failed breakout to a new trend high on Monday and a weekly close in the lower third of the week\u2019s trading range. It is also interesting to recognize that a little below this week\u2019s low is potential weekly support around the 200-Week MA at $3.93.<\/p>\n
Therefore, a drop below this week\u2019s low triggers a continuation of the decline, and a decline below $3.93 will provide an additional bearish signal. Key potential support is at the 50-Day MA, currently at $3.83. Further down from there is the last swing low $3.74, along with the 61.8% Fibonacci retracement level at $3.72. Together, they generate a significant potential support level as a drop below that swing low will trigger a bearish reversal of the nearby uptrend.<\/p>\n