Downward Pressure Remains in Natural Gas Market: What Investors Should Know
Natural gas prices have been under significant downward pressure recently, raising concerns among investors. Despite a brief respite at the Anchored Volume-Weighted Average Price (AVWAP), market indicators suggest a continued bearish sentiment.
A Closer Look at Support and Resistance Levels
Yesterday, natural gas found a temporary support level at the AVWAP, but this support is increasingly looking fragile. The price has tested the previous support level from January’s swing low at $2.99, and today’s high reached only $2.98, reinforcing the resistance at that mark. Currently, natural gas trades below Thursday’s closing price of $2.94, leaving the market in a bearish stance. Observing these trends closely can guide key trading decisions.
Decline Stalls After a Massive 41.7% Drop
The correction we’ve witnessed has been substantial, with natural gas prices plummeting by $2.04, or 41.7%, from the recent high of $4.90. This decline mirrors past corrections—including the one that followed June 2024’s swing high at $3.16, which also prompted a retreat and set the stage for new support levels. Remarkably, past patterns show that when symmetry forms in price swings, there’s potential for establishing a bottom, helping traders identify entry points or confirm their strategies.
Critical Support Levels to Watch
A key focus for natural gas investors is the possibility of retesting the lower line of the established bullish trend channel, which hasn’t yet acted as a robust support. The lower trend line offers a significant level at $2.79, coinciding with the 78.6% Fibonacci retracement. Furthermore, a measured approach should be taken regarding the 127.2% projection of the falling ABCD pattern, which indicates a potential drop to $2.77.
However, if the price manages to hold above current lows, a one-day bullish reversal could signal a potential turnaround. Monitoring movements above today’s high and reclaiming the 200-Day Moving Average, currently at $3.08, may indicate a reversal in trend and the establishment of a new bottom.
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For those keen to stay informed about market shifts, don’t forget to check our comprehensive economic calendar. Understanding the broader economic context can provide critical insights that enhance your trading strategies.
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