Since topping at a 3.150 high last Tuesday, the July 15 natural gas contract has lost .331 or 10.5% over the following 5 trading days. 1/2 of the gains made over the four previous weeks have been erased with the July contract settling Tuesday at 2.849.
One potentially bullish technical feature in yesterday's trade was the July contract holding above the 40 day moving average as support bottoming out at a 2.819 low. The 40 day moving average at 2.795 today is primary support in upcoming trade. If broken, the longer term trend will turn back down with 2.730-2.740 becoming the next downside support.
The market has reversed back higher in overnight trade as the July contract rallies up toward 2.920-2.945 resistance. A breakout above this area would turn the lower-3.000 level into the next upside resistance possibly leading to a retest of last week's 3.150 high.
The market has shaken off weak long position holders over the past 5 days of trade. Once this weakness is cleared, the market may resume the previous uptrend.
Technical Indicators: Moving Average Alignment - Neutral
Long Term Trend Following Index - Bullish
Short Term Trend Following Index - Bearish
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