The natural gas market closed higher for a second week in last week's trade with most of the gains coming during Friday's session.
Selling in the market last Thursday following release of the weekly EIA storage report dropped the June 15 natural gas contract toward key 40 day moving average support.
As support held, the June contract rallied up to a 7-week price high on Friday settling the day at 2.880. For the week, the June contract was up 3.7%, and is up 16% over the past two weeks.
A second consecutive higher week close likely indicates a post-winter seasonal low has been set in the market.
The 10 and 40 day moving averages are now in a bullish alignment for the first time since late-February. Former daily high resistance broken last Friday at 2.824 now becomes the first area of support today. Longer term support is the 10 day moving average at 2.750 followed by the 40 day average at 2.710. A close under both averages is needed to turn the trend back down.
The 2.935 overnight high is the first area of resistance today followed by the 2.982 high from mid-March.
The funds hold the smallest net long position in the natural gas market since May 2012 according to Friday's Commitment of Trader's report. The fund long position as of last Tuesday's close was estimated at 64,001 contracts, down 5,813 from the previous week. The low fund long position is a contrarian bullish indicator.
Technical Indicators: Moving Average Alignment - Neutral-Bullish
Long Term Trend Following Index - Bullish
Short Term Trend Following Index - Bullish
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