The April 15 natural gas contract broke out to the downside on Thursday from a sideways consolidation pattern that has been forming since mid-January. If the breakout holds over the next few sessions, a final drop to new price lows over the next few weeks is expected.
The support broken on Thursday by the April contract was a weekly low trend line at the 2.680-2.700 level which now becomes primary resistance. A close back above 2.700 should indicate the breakout has failed.
If weakness continues, the 2.589 contract low will become the next downside support followed by weekly low support between 2.567-2.575. A close under weekly low support would turn 2.400-2.450 into the next longer term support.
If the market does fall to a new price low for this current downtrend, it should be the final sell off before a post-winter seasonal low forms.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bearish
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