An early breakout on Wednesday by the May 15 natural gas contract above 2.550-2.560 resistance brought in a wave of short covering into the marketplace. Over the course of the day, the May contract gained .080 or 3.1% to settle at 3.610.
Even with yesterday’s rally, the primary trend remains down for the natural gas market with expectations for another downside sell off once the current uptrend ends. There should be strong selling resistance beginning at yesterday 2.625 high extending up to 2.640.
A breakout above 2.640 would turn 2.700-2.720 into the next upside resistance.
Former resistance between 2.550-2.560 broken yesterday now becomes the first area of support. A drop back under 2.550 and the 2.475 low set on Monday should be quickly tested as support.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bearish
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