Swing chart support is the pivot at $3.141. Swing chart resistance is the pivot that stopped the rally last week at $3.387. The best resistance area is the price cluster formed by the longer-term pivot at $3.651 and the 52-week moving average at $3.734.
The strong weekly close and cooperative weather pattern makes $3.387 the key level to watch this week. Overtaking this level will reaffirm the rally. If it creates enough upside momentum, we could see an acceleration into $3.651 to $3.734, where sellers will likely be waiting.
If there is no follow-through rally then we could see a pullback into the short-term pivot at $3.141. Aggressive buyers could come back in on a test of this level as they attempt to form another higher bottom. If it fails, the market is likely to continue to consolidate as traders await the next bullish catalyst which could be the weekly EIA storage report or hot weather.
Weekly Outlook
Three forces are pulling in the same direction and one is pushing back. The storage surplus is compressing, producers are holding rigs at 125, and the western heat forecast is dragging cooling demand into early June. That is a bullish setup. The eastern cool-down and Sabine Pass maintenance are the counterweights but neither one is permanent. The Energy Information Administration report on June 4 is the next gate. A light injection while the heat holds and the bulls have confirmation. A production rebound toward 110 billion cubic feet per day or a national demand miss and sellers get their opening.
$3.387 stopped the rally last week. That price is the whole trade going into June. Buyers who got long above $3.30 need to see that level break or they are sitting on dead money. Above it the resistance cluster at $3.651 to the 52-week moving average at $3.734 is where real selling shows up. Below $3.387 the pullback targets $3.141 and the bulls need that level to hold to keep the higher bottom pattern alive.
More Information in our Economic Calendar.
