Nat Gas’s 40% Rally off its Lows Has Proven Little From a Long-Term Perspective

Earlier this year Nat Gas broke through a 20 year support line (1) rather forcefully.

Since then the commodity has rallied ~40% off its proximate decade-long low of ~$1.90.

That rally has taken it back up to its first noteworthy test of reistance in the $2.65-$3.00 region formed by the red shaded area (2), an area that represents numerous swing high and low points over the past 20 years and trend-lines (1) and (3).

How the commodity reacts at line (1), should it reach that level, will be instructive as this line represented 20 year support that is now new resistance.

If shorts believed more downside was ultimately in store it would be at this line (1) @ ~$3.00 where short positions would best be built.

Regardless, from a reward/risk standpoint, there isn’t much in this very long-term chart that suggests Nat Gas has put in “the” definitive bottom for the ages and that imminent upside is at hand.

From purely a technical/price action standpoint, for this to be a consideration Nat Gas would presumably need to break back above line (1), rally and then successfully test line (1) again as support before moving higher.

Advertisements
%d bloggers like this: