The falling 20-day moving average, now at $2.86, provides the more significant trend resistance indicator, especially since the decline became more distinct following the last test of resistance at that average. It also aligns closely with the short downtrend line, reinforcing a confluence of resistance.
Testing Support Within a Broader Downtrend
Despite the recent bearish signal, natural gas has reached an area of potential support defined by a downtrend line that connects to the June 2025 swing high. That line has defined support a couple of times recently, in mid-January and late-February, and it could do so again, particularly since bearish momentum accelerated after the $3.15 lower swing high established in early March.
Measured Move Signals Possible Pivot Zone
There is also a measured move target that has now been reached, as the current downswing has seen price drop by 26.7% and the prior downswing was a decline of 24.2%. Once there is symmetry in price between sequential swings in the same direction, a potential pivot zone can be identified.
Wedge Formation Points to Imminent Breakout Window
When considering that longer trendline along with the short downtrend line, a potential bullish wedge (purple outline) formation emerges. This doesn’t mean it will be confirmed with an upside breakout, but it remains a valid possibility if the pattern retains its integrity, defined by its boundary lines. Since the two boundary lines of the pattern are projected to intersect around May 4, an upside breakout through one of the lines will likely occur prior to that timeframe.
Downside Risk Remains in Focus
If there is a bearish continuation to the downside on a decisive drop below Tuesday’s low of $2.56, then the next lower potential support zone that stands out from prior price action is from $2.26 to $2.21.
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