Monday, the November contract of natural gas futures made a 52-week low. Since Monday, this market initially rallied, but then it stalled out near the upper orange trendline on the chart below, and fell back into the grey shaded region which marks a pivotal area of support.
Today, the weekly EIA (Energy Information Administration) Natural Gas report at 10:30 a.m. EST will certainly add some volatility to this market, possibly giving clues as to which direction this future will take.
For now, the grey support zone from 2.895 to 2.88 is holding, which includes the 50% retracement of this week’s range marked in green. Bulls need to hold this zone. Otherwise, the downside target will likely be this week’s 52-week low of 2.827; and it is possible that this market could see even more selling at that level.
If the grey zone holds as support, the bulls have a lot to fight through on the upside, including the orange trendline currently at 2.937. However, on the next touch, we anticipate less resistance there.
We believe the next significant resistance will take place at 2.98, indicated by the blue price line, and that prices will fail to close higher on the first couple touches of that area.
Please note that the report from the Department of Energy today will likely generate volatility for at least an hour following its release.
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