Following last week’s EIA Natural Gas Storage Report, prices of the June contract (NYMEX:HPM14) were able to mount a brief rally up to the 4.500 area before encountering major resistance on the chart. Despite this positive spike resulting from Thursday’s storage data, the natural gas market remains under pressure and near-term momentum should continue to favor a bearish outlook. Traders should continue to monitor the 4.500 level as it has, and will likely continue to, serve as a significant level of S/R on the chart.
Furthermore, if price can sustain a trade above 4.500, this could serve as an early indication of a coming change in near-term momentum. The RSI indicator helped traders spot the bullish divergence signal in the RSI and highlight Thursday’s potential trading opportunity ahead of the number. With price lows continuing to correlate with a reading of 40 on the RSI, an argument could be made for a near-term shift in momentum.
However, in order for a bullish argument to gain credibility, it would first need to produce a confirmed trade above the previously mentioned resistance pivot at 4.500. Current levels of local support in the market come into play around 4.383 and 4.290.
Natural Gas 30-minute Bar Chart (e-Signal)