Natural gas broke down from its descending wedge pattern in early August, sliding to a swing low near $2.623 before staging a corrective bounce that has carried price back up to the $2.920 area.
This recovery has pushed the commodity right into a cluster of Fibonacci retracement levels that lines up with a prior area of interest, the same consolidation zone natural gas traded in in June and early July.
The 38.2% Fib at $2.888 has already been reclaimed, but the 50% level at $2.970 sits just above current price and could serve as the next hurdle. If sellers regroup here, natural gas could resume its slide back toward the $2.623 swing low or even lower, especially since this zone also overlaps with the lower boundary of the shaded area of interest that previously acted as support.
A larger rebound could still stretch to the 61.8% Fib near $3.052, but that would likely require a more convincing shift in momentum.
On the subject of moving averages, the 100 SMA remains below the 200 SMA, keeping the path of least resistance tilted to the downside for now, although the gap between the two has been narrowing as price grinds higher. A sustained close above the 200 SMA would be needed to shift the broader bias back in favor of buyers.
Stochastic has been cycling briskly between overbought and oversold territory, and the latest upswing suggests bullish momentum is still present, though the oscillator is nearing levels where exhaustion could set in and trigger another pullback.
RSI, meanwhile, is still hovering below the midline after recovering from oversold conditions in August, indicating that sellers may still have a slight edge even as price consolidates. If RSI fails to reclaim the 50 mark, it could reinforce the view that the current bounce is merely a pullback within a larger downtrend rather than the start of a fresh uptrend.
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