The May 15 natural gas contract was heavily sold on Monday as the market gapped lower on the open and remained weak into the session’s close. For the day, the May contract fell by 3.7% or .098 settling at 2.536.
Almost all of last week’s gains have been erased over the past 2 sessions which is characteristic of a short-covering rally. Although the market is currently higher in today’s early trade, the primary trend remains down.
The 10 day moving average at 2.575 is the first area of resistance today followed by the gap created on Monday’s open between 2.596-2.625. Longer term resistance is last week’s 2.693 high.
Monday’s 2.534 low is the first area of support today followed by the 2.475 contract low set last Monday. Longer term support is at 2.390-2.400.
Current weakness is expected to be the final leg down for the market before a seasonal and possibly multi-year price low is set.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bullish
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