Given the choice of siding with a bullish hurricane forecast or a bearish technical outlook, the natural gas futures market chose the latter Tuesday as prices gapped lower at the opening bell and tumbled to new two-week lows.

The June contract was dealt the biggest blow, dropping 4.2% or 27 cents to finish the session at $6.154. At 106,316 estimated volume was relatively heavy for the second straight session, adding credence to the price shift.

Heading into Tuesday’s session, there was a uncertainty among market-watchers. Bulls were quick to point to a government forecast suggesting it will be a more active than normal hurricane season. The National Oceanic and Atmospheric Administration (NOAA) on Monday released its latest hurricane forecast calling for 12-15 named tropical storms and six to eight hurricanes — two to four of which are expected to become major hurricanes.

However, after experiencing waning momentum in both last Friday’s and Monday’s trading sessions, the market was unable to gain any traction from the bullish hurricane outlook. Instead, traders used the session to take profits and lighten their long exposures.

“We were overbought on the daily Stochastics,” noted Craig Coberly of GSC Energy in Atlanta. “From a technical standpoint, the move lower [Tuesday] did not come as a surprise.”

In addition to the overbought momentum indicator, Coberly also point to an almost perfect 50% Fibonacci retracement — of the early January to late February sell-off — that was completed by last Thursday’s $6.52 high in June futures.

Because the Fibonacci retracement levels have served him well in the past, Coberly is using them to project how deep the current correction may extend. “A 50% retracement would take us down to $5.88. A 61.8% retracement would project to $5.73,” he continued.

When quizzed as to whether he saw the 27-cent price slide Tuesday as overdone, Coberly did not waver from his bearish stance. “I would only view a bounce from current levels as a selling opportunity,” he maintained.

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