The aforementioned pivot at $3.196 is the key to sustaining upside momentum. The three bottoms at $3.059, $3.001 and $2.974 are holding together the support base with help from LNG demand.
The key targets on the upside are the main top at $3.418 and an intermediate pivot at $3.465. The latter is a potential trigger point for an acceleration to the upside.
The longer-term upside target area is a resistance cluster formed by the 52-week moving average at $3.691 and the long-term 50% level at $3.713.
Essentially, hold the pivot at $3.196 and the market has a chance to breakout to the upside if the weather and LNG demand cooperate. A failure at $3.196 is not likely to lead to new lows, but rather lead to the formation of an elongated support base.
What to Watch
Weather and LNG are the two variables that determine this week’s direction. If the early July heat forecasts hold and feedgas volumes recover from the spring maintenance dip, the demand story catches up to the support base the technicals have been building since April. The pivot is holding. The bottoms are intact. The market needs the catalyst.
Thursday’s storage report either confirms that the demand improvement is real or hands the bears another comfortable injection number to trade on. The holiday book makes the reaction faster and louder than normal. If both demand drivers deliver and the storage number cooperates, this is the week the breakout conversation moves from setup to execution. If either one disappoints, the base holds but the breakout waits.
More Information in our Economic Calendar.