Technical outlook:
Natural Gas slipped back to 6.40 intraday on Thursday after its climb above 6.80 early this week. The commodity might have carved an interim low at around 6.06 and is now preparing to push through 8.30 before turning lower again. Bulls will be poised to hold prices above 6.06, keeping the structure intact in the near term.
Natural Gas has been rallying since June 2020 after hitting lows at around the 1.5 mark. Bulls have remained in control since then and pushed prices through the 9.65 mark, hitting the respective Fibonacci extensions as shown on the daily chart. Ideally, a corrective drop should unfold towards 4.63, which is the Fibonacci 0.618 retracement of the above rally.
Natural Gas has terminated its first wave at around 6.06 within the proposed corrective phase, which began from the 9.65 highs. Prices are into the second leg higher towards 8.30 before turning lower again as the third leg is progressing towards 4.63. Also, note that 8.3 is the Fibonacci 0.618 retracement of first wave and hence potential resistance for the second wave to terminate.
Trading plan:
Potential drop through 4.63 against 9.65
Good luck!
