Technically, according to the daily swing chart, the main trend is down. A trade through $3.155 will signal a resumption of the downtrend. Taking out $4.425 will change the main trend to up.
The moving average trend indicator is neutral. Holding above the 200-day moving average at $3.408 is supportive, but trading on the weak side of the 50-day moving average at $3.773 is bearish.
Key Support and Resistance Levels
Additional support is being delivered by a retracement zone at $3.502 to $3.284 and potential resistance is the retracement zone at $3.790 to $3.940. The 50-day moving average at $3.773 and the 50% level at $3.790 also forms a resistance cluster.
What to Watch After the EIA Release
Looking ahead to today’s trade, the EIA storage report will be the main catalyst. The cold weather forecast for the Northeast through February 8 is likely to be a minor catalyst.
Look for a bullish tone to develop if buyers can hold above the 200-day moving average at $3.408 while taking out the 50% level at $3.502. The key upside target is $3.773 – $3.790, followed by $3.940. The tone will flip to bearish on a sustained move under the 200-day, which leads to an eventual break down under the $3.155 swing bottom.
In my opinion, gains are likely to be limited by $3.773 to $3.940 as long as the EIA doesn’t report a draw over 450 bcf and the cold weather forecast doesn’t extend beyond February 8.
The question is, will the massive draw flip the surplus to the 5-year average into a deficit? Look for volatility and a possible two-sided trade after the EIA report is released.
More Information in our Economic Calendar.
