In the last update on natural gas in Thursday’s video, /NG was highlighted backtesting the near-term price channel off the Oct 11th lows. /NG was unable to regain the price channel and then went on to put in a lower high on Friday followed by more tests of the 2.297 support level on Friday, last night and once again today, finally breaking that support level followed by an immediate & impulsively leg down which also took out the 2.264 support level as well.
Natural gas futures are still holding above the 2.205 support & still above the Oct 11th low but today’s drop certainly isn’t a normal pullback within the recent short-term uptrend as that has clearly been invalidated. Should /NG hold above the October 11th reaction low & go on to take out last week’s highs, the potential for another leg higher is possible while a break below that Oct 11th low would likely open the door for more downside. The chart below provides some statistics on the returns for natural gas followed the other 3% drops over the past 12 months.