The September 14 natural gas contract which expires on tomorrow’s close began the new trading week on Monday with a strong rally higher gaining .097 (2.5%) to settle at 3.937.
Yesterday’s rally has stalled, at least temporarily, at 40 day moving average resistance which is at 3.960 today with the current overnight high being 3.957.
A breakout above the 40 day moving average which has not been touched since June 26th would be further confirmation that a market low has been set.
There should also be selling resistance beginning at the 4.020 weekly high and extending up to the 4.100 level with a close over this area needed to turn the longer term trend back higher.
If resistance holds and the market remains in a now 5 week sideways range, the 10 day moving average will become the first area of support at 3.860. Longer term supports are the 3.725-3.727 weekly lows set over the past month.
A drop under 3.725 would keep the primary market trend down with following support at 3.650 and the 3.582 contract low.
Current weakness should be the final price break of 2014 before a seasonal low is set. Once a low does form, a rally back higher over the next 4-6 months is expected.
Technical Indicators: Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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