By Reg Curren July 23 (Bloomberg) -- Natural gas futures may tumble below $3 per million British thermal units after a rebound pushed prices to an area of resistance between $3.87 and $4, according to a technical analysis by Barclays Capital. The futures contract rallied 8.8 percent last week, the first gain in four weeks, posting an “impressive weekly reversal candle,” Barclays analysts in New York including MacNeil Curry said. Futures fell to $3.225 per million Btu on July 13 before closing at $3.669 on July 17. The low for the year so far is $3.155 reached on April 27. “The strength of this larger trend remains in effect and all we’ve done is bounce into” resistance around $3.87, Curry said in an interview. “I think we’ll stall and start to roll back over to the downside. There’s nothing to suggest yet that this is a turn in trend.” Prices may decline to support at $3.04 and potentially as low as $2.52 within the next six weeks, Curry said. Gas last traded in the $2.50 area in March 2002. Natural gas for August delivery rose 8.8 cents, or 2.4 percent, to $3.793 per million Btu yesterday on the New York Mercantile Exchange. Futures reached $3.904 per million Btu before retreating. Prices are down 33 percent this year. “Once this bounce completes we will roll and make a run toward that $2.50 area,” Curry said. “We’ve seen a couple of these, one for Feb. 2 and one in December and there was no follow through.” Candlestick patterns are formed by a wide body on price chart representing the open and close of security, with a vertical line showing the range of the day. Technical traders monitor patterns on daily charts for clues to price direction, and may sell or buy based on those signals. To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.

Source