A short-covering rally in the natural gas market last week lifted the summer 15 strip (May 15-October 15 contracts) higher by over .200 or 8% from last Monday’s low.
However, as is typical of short-covering rallies, the price rise was brief and has been followed by a sell off back lower in this week’s early trade.
A bearish triangle pattern was initiated in the summer 15 strip three weeks ago. The downside measuring objective for this pattern is for trade down to the $2.400/MMBtu level.
Triangles appear near the end of a price trend.
Whether or not the measuring objective is reached, current weakness is expected to be a post-winter and possible long term price low for the natural gas market.
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