Monthly Support May Continue to Hold
Monthly support is also at the 1.59 swing low. During April natural gas has remained within the range from March forming a possible second sequential inside month. Therefore, a sustained breakdown below 1.59, if it occurs before the end of the month, will trigger an inside month breakdown from March. That’s a bearish signal that could be followed by an expansion of volatility.
Strong Support at or Above 1.52 May Continue
As noted above, the 1.52 price level is significant and may continue to act as support. Consequently, if volatility expands there is a possibility the 1.52 level is broken. If that happens the next lower target is around 1.44, a 29-year low. However, there is another price area to watch at 1.49. That is the target from an extended retracement of the six-month rally that began from the prior trend low a year ago.
Contraction in Volatility
If April ends without a breakdown below last month’s low, there will be two inside months further highlighting the decline in volatility experienced recently. As price compresses it prepares for its next move and a pickup in volatility. That could come from a bounce off monthly support or a breakdown.
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