After closing the overhead gap area on Wednesday, the May 15 natural gas contract turned back down yesterday falling to a new weekly low during the session.
Sellers came out in force from the opening bell in Thursday’s trade with selling momentum picking up after release of the EIA weekly storage report. By day’s end, the May contract had bottomed out at a 2.520 late day low settling at 2.531, down .075 or 2.8%.
The market may see short-covering later today if support at the lower-2.5000 level continues to hold. However, the primary trend remains down as the market completes a final leg down of the current trend. Once the market bottoms, a post-winter and possibly long term price low is expected.
A drop under lower-2.5000 support would turn the 2.475 contract low into the next downside support followed by 2.390-2.400.
The 10 day moving average at 2.575 is the first area of resistance today followed by the 2.622 weekly high. Longer term resistance is the 40 day moving average currently at 2.695.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bullish
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