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Notice that the price zone around the 20-Day MA and internal uptrend line trend indicators were successfully tested today as resistance following a breakdown below those lines last week. This is typical behavior of price in a developing downtrend. Prior support is tested as resistance before a continuation of the bearish decline. There has been one downswing since the new trend high of $4.90 was reached last week. A swing low was established at last Thursday\u2019s low of $3.96 and today\u2019s high generated a possible lower swing high. If there is a decline below last Thursday\u2019s low of $3.95, a second leg down will be indicated.<\/p>\n
Since the 20-Day MA failed to hold as support, the 50-Day MA, currently at $3.84, becomes a potential target. Moreover, the uptrend that began from the recent $2.99 swing low shows a bearish reversal if the higher swing low of $3.74 from March 3 is exceeded to the downside. Similarly, since the internal uptrend line was broken and it marks support for a trend with a relatively steep angle, the next lower trendline becomes a potential target. Keep in mind that both the dynamic 50-Day line and next lower trendline are rising. Despite the potential for further downside in prices, the market for natural gas will provide clues based on how it behaves around particular price levels of support and resistance.<\/p>\n
If the 20-Day MA and trendline continue to show an area of resistance, the current bearish pullback can be expected to continue, or a consolidation phase exhibiting downward pressure may form. Although there were signs of brief strength over the past few days as natural gas traded above the 20-Day line and trendline, on each of the prior three days the closing price for the day was below the lines.<\/p>\n