Natural Gas futures have continued their drive deeper into contract lows despite strong demand from colder than normal weather in the US, but appear to have found pivotal support just below the $4.00 level. The latest round of selling pressure has flushed out the tail end of a long term Falling Wedge chart pattern, shown here on the Autochartist 240-minute time interval.
This Falling Wedge is a fairly well organized pattern, and last week's gradual deceleration of the sell-off as it approached the support established by the lower trend line is an encouraging development for a possible swing low to complete the formation.
If the pattern holds, the path of least resistance in the near term is for a retest of the resistance at the upper end of the range near $4.06, which may be the last swing high before the apex of the wedge forces a breakout.
A close above $4.15 would likely trigger an upside rally from the wedge, with the overall duration of the pattern likely resulting in price projections calling for the market to move to significantly higher levels. Otherwise, a breach of the $3.80 support however will add further downside risk to the picture.
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