May '13 natural gas moved dramatically lower today -- as it is inclined to do -- after starting the month of April off with a round of profit taking. Your Inputs Monitor posted yesterday that May '13 natural gas ended March with a bang, running through psychological resistance of $4.00 to top at $4.121 last week.
Natural gas futures are no stranger to hard swings. We have seen this before and the technicals make this contract look deceptively predictable. That fact may be contributing to investor activity. Note the 'humps' that emerge on this five-day chart from Yahoo -- an afternoon dash to the upside followed by sideways movement until roughly 24 hours later when the contract either jumps higher for more sideways motion, or drops 5-10 cents for a sideways run there...and on it goes.
The May '13 natural gas contract closed today at $3.963, a slide of six and 3/4 cents on moderate volume. We look for May '13 natural gas to continue to stairstep and if it can break the short-run support of $3.95, $3.90 would be the next target of support. But if profits taken from nattie's upside swing find their way back into this market, the pattern may move back to the upside.
While charted data may suggest a level of predictability, the only real certainty is that natural gas will continue to move in this, its traditional fashion. The question then is a matter of higher or lower, and the answer to that is not as predictable as it appears.