On the continuation chart, natural gas has been stuck in a wide trading range since mid-January. This range will likely persist for at least another few weeks. However, the July natural gas chart is in a downtrend that favors a decline to $1.70 during the next couple of days. This will fill the $1.722 June-July rollover gap on the continuation chart and fulfill the next major targets for the waves down from $2.364, $2.027, and $1.979. Support at $1.70 is a probable stalling point due to its importance on both the July and continuation charts. Nonetheless, any move up from $1.70 will likely be corrective and a close below $1.70 will clear the way for $1.66 and lower.
There are, however, a few bullish technical factors that suggest a larger test of resistance might take place first. Today’s close above Monday’s $1.802 midpoint completed Tuesday’s morning star. Also, this afternoon’s move down held the 62 percent retracement of the move up from $1.742. Should natural gas overcome $1.86, look for a larger upward correction to challenge $1.90. The $1.90 level is expected to hold. Settling above this would call for $1.95 possibly $1.99.
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