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Tuesday, July 09, 2024 5:22:25 PM
By: Bruce Powers | July 9, 2024
• Natural gas shows bullish reversal, testing key resistance levels around the 200-Day MA, setting the stage for either further gains or a continued correction.
Natural gas triggered a bullish reversal on the daily chart today as it broke out above Monday’s high of 2.39. Subsequently, the 200-Day MA was successfully tested as resistance as price was rejected below the 200-Day line from the day’s high of 2.45. Today’s high was 2.45 and the low of the day was 2.33. This sets up the first day in eight with a higher daily low and a higher daily high.
It is not surprising that resistance was seen around the 200-Day line as it was previously marking a support area. Either resistance will continue around the 200-Day MA, followed by either an upside breakout, or a bearish reversal and continuation of the correction is sustained.
![](http://responsive.fxempire.com/v7/_fxempire_/2024/07/a-screenshot-of-a-graph-description-automatically-9.png?func=crop&q=70)
Bearish Sentiment Dominates Until Rally Above 200-Day MA
Arguably, the retracement may be complete but there is not enough information yet to make that determination. There remains a lower target zone from 2.23 to 2.17 that has yet to be tested as support. If the 200-Day line continues to reflect resistance, a test of the lower support target becomes more likely. Nevertheless, the bearish scenario begins to soften on a decisive rally above last Tuesday’s high of 2.48. That will put natural gas above the 200-Day line, currently at 2.46. Strength would be confirmed on a daily close above 2.48.
Rally to Test Prior Support at 2.63?
The last breakdown price level was at the swing low of 2.635 (B) from June 24. Therefore, a swing back up to test that price area as resistance may play out if today’s daily bullish reversal can be sustained. Other price levels to watch on an upside move include the 50-Day MA at 2.54, the 38.2% Fibonacci upside retracement at 2.61, and the combined 50% retracement and 20-Day MA at 2.71. Each price area could see resistance on the way up.
Downward Pressure Remains
Given the bearish reaction today when encountering the 200-Day line resistance area, downward pressure remains. Unless there is a decisive rally above the 200-Day line with a daily close above it, the correction is set up to continue. As noted, there is a slightly lower target support zone that is derived from four price levels. Two come from previous support or resistance levels and two are from Fibonacci calculations. Just using the 61.8% Fibonacci retracement as a target level is enough. The other levels further confirm the likelihood of a 61.8% retracement prior to the correction being complete.
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