FX.co ★ Natural Gas (NG)

On Monday, natural gas continued to create a tight range consolidation pattern with support at $2.80 and resistance at $2.93, testing a crucial support zone for the seventh day. The low and high from last Thursday, respectively, define those levels. The convergence of multiple indicators, such as the 78.6% Fibonacci retracement at $2.82, an earlier uptrend line that was not adjusted to the new swing low in late April, and the higher swing low at $2.81 from February, defines the potential significance of the consolidation range as support. This grouping of technical support levels makes the current range more significant and enhances the likelihood that buyers will try to take back control. The combination of support signs and the absence of downward follow-through indicates that a countertrend rally from the support zone may potentially take place, even though it hasn't happened yet. A one-week bullish reversal over last week's high, which created a rather narrow range hammer candlestick pattern, would be indicated by a decisive climb above $2.93. However, further proof of bullish momentum would require follow-through purchases. As opposition is expected close to previous important support zones from the recent rise, upside may be constrained. The higher swing low from May at $2.98 and the subsequent higher swing low at $3.06 are the starting points for upside objectives. Two weeks ago, a decline below the $3.16 price area defined by a daily high from July 9th caused the breakdown from a rising expanding formation. Additionally, that region coincides with possible dynamic opposition from the 50-day moving average, which is now close to $3.13. The 50-day moving average is the most important prospective dynamic resistance zone because it was found to provide important dynamic support during the last rise. Therefore, a successful test of resistance close to the 50-day moving average would probably finish the first decline after the breakdown from the broadening formation and pave the way for a bearish continuation of the larger developing bearish trend, which just set a new lower swing high at $3.42 in early June.