Fibonacci and ABCD Targets Define Downside Risk
Lower targets start with an 88.6% retracement of the advance at $2.95, that began from the low in August. A little lower is the 100% projection for a falling ABCD pattern at $2.89. That matches a higher monthly low from October and therefore takes on greater potential significance. Given the conviction of sellers during the correction, with sharp declines and a failure of the long-term average, it would not be surprising to see the lower level(s) hit before the correction completes. The speed to the rebound will then provide clues to whether bearish momentum is faltering.
Bounce Potential Remains Within Corrective Structure
Despite the potential for further downside, the area around the trendline could continue to show support, leading to a bounce. Since natural gas has been correcting with a larger bull trend, it is expected to complete the retracement and continue to progress the trend. An advance above Thursday’s lower daily high will provide the next sign of strength, but within a downtrend.
Key dynamic resistance is then at the 10-day average, currently at $3.36 and falling. Short-term downward pressure remains with trading below the 10-day line. That dynamic resistance zone is followed by a lower swing high at $3.50, the 200-day average at $4.54, and another lower swing high at $3.63. A daily close above the first lower swing high at $3.50, as that would confirm a bullish reversal based on structure.
Weekly Close and Momentum Hint at Correction Maturity
Watch how the week ends, as a daily close below last week’s low of $3.13 will confirm weakness on that larger timeframe. The Relative Strength Index (RSI) momentum oscillator is near a level where support was seen during prior bearish corrections and supports the idea that the correction is close to complete. Moreover, the two largest prior bearish measured moves since the 2024 bottom ended with a 46.5% decline and a 40.7% drop price. The current decline shows a 45.3% drop in price since the December peak at $5.50. This would suggest that the current correction has hit a low or is very close to doing so.
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