The intermediate range is $3.881 to $2.893. Its 50% level at $3.387 is the first upside target. It was tested on June 1 when the market topped at $3.396. The longer-term range mid-point is $3.642.
Currently, the 50-day moving average at $3.130 is providing support. It forms a support cluster with a minor pivot at $3.145. It was successfully tested on Tuesday when the market first dropped to $3.099 then recovered this level into the close.
The 200-day moving average at $3.621 is resistance. It creates a resistance cluster with the long-term pivot at $3.642.
Trader reaction to the pivot at $3.248 will determine whether the bulls or the bears are in control. A sustained move over $3.248 will signal the presence of buyers. If this creates enough upside momentum then look for a possible retest of $3.387 to $3.396. A near-term breakout over $3.396 will put $3.621 to $3.642 on the radar.
A sustained move under $3.248 will indicate the presence of sellers. This could create a labored break with support ranging from $3.187 to $3.131. Crossing to the weak side of the 50-day MA will indicate increasing selling pressure with $3.099 the next target. This is another potential trigger point for an acceleration to the downside.
What to Watch
Today’s Energy Information Administration report is the immediate catalyst. A build below 99 bcf extends the streak of below-average injections and keeps the bid under July Nymex Natural Gas. Heat forecasts running above normal through mid-June support the demand side. Qatar’s Ras Laffan damage keeps global LNG supply tight and U.S. export demand elevated. Production near 109.6 bcf per day is the bearish offset but the market is not trading supply growth right now. It is trading the builds and the weather. That does not change unless injections start surprising to the upside or the heat forecasts break.
The pivot at $3.248 sets the tone for Thursday. A sustained move above it targets the $3.387 to $3.396 resistance zone and a breakout above $3.396 puts the 200-day moving average at $3.621 and the long-term pivot at $3.642 on the radar. Below $3.248 support layers down from $3.187 to the 50-day moving average at $3.130. Tuesday’s recovery off $3.099 showed buyers are still defending that area.
More Information in our Economic Calendar.
