Active traders will tell you that when market sentiment wavers and volatility increases they rely more heavily on their skill at identifying levels of support and resistance. Finding potential turning points during times of increased uncertainty becomes more critical to risk management than when the market is within a strong trend and when most participants are complacent.

Taking a look at the long-term weekly chart of the spot price of natural gas, you can see that several bullish indicators suggest a move higher could be in the cards. The recent bullish MACD crossover along with rising RSI and fast stochastic indicators would usually be enough for most traders to use as a signal to place a buy order. However, given the uncertainty in the other markets the key levels of resistance identified by the trendlines could be enough to cause many traders to remain on the sidelines. (For more, see: Momentum And The Relative Strength Index .)

Bias Remains Downward In Natural Gas

In a previous article. we mentioned that market sentiment in the natural gas market and particularly towards key players such as Chesapeake Energy Corp. (CHK ) pointed downward. At the time of writing in early October, the bears were in the process of pushing the price of CHK below a key long-term level of support. Based on the price action that followed the breakdown, you can see that the chart has been a textbook example of how to trade key levels of support and resistance (buying near support and selling near resistance). (For more, see: Interpreting Support And Resistance Zones .)

This chart is of specific interest at this point because the trading ranges have tightened as the price nears the trendline. The Doji star and other confined ranges suggest that the resistance is as strong as many traders have anticipated and that the bullish signs on the MACD and stochastics may not be enough to reverse the downtrend. Based on the chart below, the next leg of the trend will be in the downward direction.(For more, see: Star Formations Spotlight Luminary Trades .)

Head And Shoulder Pattern

No analysis of natural gas stocks is complete without a look at Exxon Mobil (XOM ). Taking a look at the five-year weekly chart below, you’ll notice that it is trading within a defined head and shoulders pattern. Traders will be keeping a close eye on XOM to see if falling energy prices will be enough to send the share price below the neckline of the pattern. A break below $90 on heavy volume would be the technical sell signal traders need in order to confirm the next wave of sell orders. (For more, see: How To Trade The Head And Shoulders Pattern .)

Most of you know too well that downward pressure has dominated most of the primary commodities over the past several weeks. Despite a recent bounce in the price of some commodities such as natural gas, traders will want to remain cautious since the spot price is now nearing key levels of long-term resistance. The identified trendlines on the charts above all pose a significant threat to a move higher. Hesitation from the bulls, which is evident in chart patterns such as the Doji star or the head and shoulders, suggest that the next wave of momentum will likely be downward. (For more, see: Oil, Oil Stocks: What The Charts Are Saying .)