Natural gas is trading at $2.59, and is still very much in the grip of a downtrend within a downward channel. Price has broken below that $2.71 support zone, which is now acting as resistance, and that’s confirmed our bearish continuation scenario. The candles are small and consistently closing lower, which is telling us that sellers are firmly in control – and it’s not just a panic move either.
Our 50-SMA near $2.72 and 200-SMA around $2.79 are both trending downwards, which is reinforcing the bearish structure. RSI is hovering around 35-38, and while it’s close to oversold, there’s no sign of divergence yet, which tells us that our downside momentum is still intact.
Unless we can reclaim that $2.70 level, the path of least resistance is going to stay lower, towards $2.56 and potentially even $2.50. It’s going to take a break above $2.79 to shift the short-term bias.
Trade idea: Sell below $2.70, look for a target of $2.50, and set a stop above $2.80.
