Downtrend Line Marks the First Line of Resistance
The inner descending trendline marks dynamic resistance to the current bear trend (retracement), as a rebound above it will provide the first sign of strength and may lead to further confirmation of strength. However, once today is over, a rebound above today's highs would provide a short-term bullish sign. Upside follow-through will be key. Yesterday's high was 2.21. It's fair to say that a sustainable bullish signal is unlikely until natural gas rebounds above these highs. That's it for now.
Initial upside target from 2.44 to 2.47
If the rally can continue to advance, the initial upside target for natural gas appears to be around 2.44. This begins a potential resistance zone as high as 2.47, marked by several indicators. The 200-day moving average and the 20-day moving average are both at 2.44. Previous low support (now potential resistance) is around 2.47. Furthermore, the downtrend line converges with this price area. But it didn't end there. The 38.6% Fibonacci retracement level of the decline lies within the 2.45 area. Finally, note that the most recent minor internal move met resistance at 2.45 on July 9th.
Under 2.00 Target 1.92
The 61.8% Fibonacci retracement level fell below on Monday, although there are reasons to suspect that the 2.02 to 2.00 price area may continue to act as support, followed by a rebound. This opens the door to the 78.6% Fibonacci retracement level at 1.92. The 2.02 to 2.00 price area results from the completion of the descending ABCD pattern extending from the 161.8% golden ratio. It is based on the previous swing high of 2.00 in early March, which was also the top of the bottom symmetrical triangle pattern.
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