Natural Gas Sees Only Moderate Upside Off Support

Interesting situation is developing in the UNG because the price structure pressed from last week's failed highs in and around 56.30 right to a test of the March- May support line at 53.00, which thus far has contained any further weakness. HOWEVER, let's notice that each time prices neared the channel support line, they reversed to the upside SHARPLY- to start a new upleg. So far, THIS TOUCH OF THE SUPPORT LINE HAS ELICITED A VERY MODERATE UPSIDE RESPONSE SO FAR, which could be indicative of an exhausted market, or a just a delayed response. Put it this way: if I was UNG bull, I would be very concerned about the sluggish reaction after hitting a three month up trendline. In any case, key near term resistance hovers at 53.80 to 54.20, which if hurdled, should trigger additional strength that just might fit the profile of prior upside reversals within the channel. Conversely, a break of 53.00 will be problematic for the bulls, and should trigger long side liquidation that presses the UNG to 52.00 very quickly.