After trading down to a new contract of 2.475 and the lowest price level since June 2012, the May 15 natural gas contract rebounded back into the close. The contract finished the day exactly where it began settling at 2.511.
The market may be ready for a short-covering rally following last week’s 8% decline. 2.550-2.560 is the first area of resistance for the May contract. A breakout above this resistance should see a continued rally toward the 10 day moving average at 2.600 today.
Longer term, the primary trend is expected to remain bearish as the market completes the bearish triangle pattern initiated two weeks ago. For the May contract, this could indicate an eventual drop toward the 2.300-2.350 level.
Triangles appear near the end of a price trend. Current weakness should be the final sell off of this downtrend.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bearish
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