Futures Now

This commodity is headed for a short squeeze: Technician

This commodity headed for a short squeeze: Top Technician

While crude oil has surged nearly 40 percent from its recent lows, has remained in the dumps, falling 4 percent on the year despite Thursday's sharp 5 percent rise. But according to one highly regarded technician, a confluence of seasonal factors and overly bearish sentiment could set the stage for an even bigger rally to come.

On CNBC's "Futures Now," Jonathan Krinsky said natural gas is on the cusp of experiencing a major "short squeeze" that could send the commodity up another 10 percent to $3 per Btu.

"While the structural chart is firmly bearish, we think a countertrend rally could be underway," said Krinsky, market technician at MKM Partners, on Thursday.

He points to what he calls is a "momentum divergence" in the weekly chart. By his work, the negative price action has not been confirmed by certain key momentum indicators. According to Krinsky, this divergence has historically pointed to higher prices. Additionally, he noted that Thursday's breakout above key resistance at $2.64 means that natural gas has more room to run.

"Breaking above that resistance level could bring us to $3 as early as this week," he said.

Krinsky also points to the overwhelming negative sentiment surrounding the commodity.

"If you look at the positioning of large speculators, they are the most net short they've been since 2011," said Krinsky. "If everyone is on one side of the boat leaning bearish, it doesn't take much to trigger that next move to the upside and we are starting to see that right now."

Last, Krinsky said that seasonally, we are heading into a very strong month. "If you look at the past 20 years, May is the fourth-best month for natural gas," said Krinsky. "So we're setting up a historically bullish month with a structurally bullish setup."