Will today’s EIA Natural Gas (NYMEX:HPM14) report be enough to stop the bleeding? This is the question on the minds of many natural gas traders heading into today’s report at 9:30 am CT. The market has been in a bearish frenzy since the start of May, as natural gas prices have sold off nearly $0.50 this month alone.
Despite the extremely bearish momentum in natural gas, there does appear to be a (potential) light at the end of the tunnel for traders waiting to get long this market. Throughout the recent sell-off in price, the RSI has continually made higher lows on the indicator while price has put in consecutive lower lows on the chart. This divergence between price and momentum is known as “bullish divergence” and can often times be a precursor to a rally in price. Whether or not that rally will come today is yet to be seen; however, a bullish storage report could be just what this market needs.
The next level of relevant support in the market appears to be at the 4.290 pivot, followed by a previous 61.8% (shown as 38.2) Fib. retracement on the cart around 4.262. If the longer term directional bias in this market is to remain firm, look for prices to hold above the previously mentioned Fib. retracement. Preliminary estimates for today’s inventory report are looking for a build of +101 bcf.
Jun. ‘14 Natural Gas 30-minute Bar Chart