Level of Support Preserves Stability
Last week, the price of natural gas touched a potentially significant support level between 2.53 and 2.24, momentarily reversing its downward trend. The 88.6% Fibonacci retracement at 2.42 and a significant declining measured move at 2.33, both shown by purple arrows, are included in the support zone.
Market Uncertainty is present
The bull’s performance on Wednesday was below par, raising the issue of whether the downward trend will continue. A drop below the low from last week would signal the continuation of the negative trend.
Future Prospects for the Week
A breakout over 2.66 would indicate a gain in price and a likely continuation of the upward momentum, barring a continuation of the bearish trend. On the other hand, a collapse below 2.36, the low for the current week, would signal a negative extension of the downtrend. If the downside occurs, great attention should be made to the response at the point when the measured move comes to an end, which is 2.33. Support might then be located anywhere between there and the support’s low, 2.24.
Market Activity Is Still Staggered
Natural gas may suffer some sideways trading as activity levels keep falling and price consolidation rules. This response, however, is not common in the wake of a significant natural gas price adjustment. With the exception of one, the market reversed significantly off the bottom in each of the other eight significant declines during the previous 22 years. It is still unclear how the latest correction will turn out.