Over the past three days of trade, nearly all of the gains made last week by the February 15 natural gas contract have been erased.
In yesterday’s session, the February contract was heavily sold over the course of the day losing .296 or 9.5% to settle at 2.831.
Weekly low support between 2.750-2.783 held in Tuesday’s session with the February contract bottoming out at a 2.821 daily low. This support has been tested several times during January but has yet to be broken.
A drop under 2.750 would keep the primary market trend bearish with the next level of support becoming the 2.575 weekly low from August 2012.
Buying has come into the market overnight rallying the February contract back toward 2.980-3.020 resistance with the current overnight high being 3.015. A breakout above lower-3.000 resistance would turn the near term trend back up with 3.180-3.220 being the next area of resistance followed by last week’s 3.352 high.
Longer term, as long as the February contract holds below the 40 day moving average currently at 3.440, the trend will remain down.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bullish
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