Natural Gas News: Bearish Market Ahead of EIA Inventory Report Today

The trend is down. However, the market appears to be building a support base, which is a strong sign that traders are recognizing value. The current support base is $2.561 to $2.763, with $2.662 the mid-point.

In this particular set-up, we’re anticipating a potential breakout to the upside. But given the nature of the natural gas market, we’re going to need a catalyst to spark the move.

Technically, the key breakout area today is a long-term trendline at $2.740. Overtaking this level will be the first sign of shifting momentum. The second sign of strength will be a breakout over the minor swing top at $2.763. This move will change the minor trend to up and actually shift momentum to the upside.

A strong breakout over $2.763 accompanied by higher than average volume is what we’ll want to see. This will signal that actual buying and short-covering are giving prices a boost. If it’s strong enough the rally should carry us into the 50-day moving average at $2.910.

The 50-day MA is important so watch the price action and read the order flow if it is tested, because it can act as major resistance or the trigger point for an acceleration to the upside into a major pivot at $3.025.

EIA Report Is the Only Thing That Matters Right Now

The market is expecting a 97 bcf injection today. The five-year average for this time of year is 64 bcf. That gap tells you everything about where domestic supply stands right now. Last week’s report already showed inventories running above last year and above the seasonal average. A number near expectations today takes one more bearish argument off the table for the bulls and hands it to the bears.