Natural Gas has been on an impressive run this month since coming off its lows on 4 March but the end of the first quarter may also bring an end to the rally.
NatGas is approaching a key resistance zone – between 1.99 and 2.00 – which could provide a ceiling for the rally, or should it break beyond here propel it higher.
Aside from being a level of support during its decline, this area also marks the 50% retracement of the move from this year’s highs to lows. Moreover, the descending trend line from 21 November 2014 highs also intersects at this level which could provide additional resistance.
The fact that momentum in the rally appears to have faded on the most recent high – MACD histogram and possibly on the stochastic – may also indicate that the rally is running out of steam at a time when a strong push is needed.
If we do see a break through this level then it could point to much broader gains ahead. The first test of this could come around 2.09, the 61.8% retracement of this year’s high to low, with a break of this further indicating that we’re seeing more than a minor correction on this occasion.
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