A breakout on Monday above 2.390-2.400 resistance lifted the
December 15 natural gas contract to a 2.460 early morning high.
After partially closing the October open gap area between
2.450-2.483, the December contract sold back off into the session’s close
finishing the day at 2.385, up .024.
Daily settle back under 2.390-2.400 resistance on Monday was
a bearish technical signal as the rally above resistance failed to hold.
Selling has come back into the market in today’s early trade
dropping the December contract back under the first area of support today which
is the 10 day moving average at 2.320. This turns last week’s 2.234
low into the next downside support.
Longer term support is the 2.188 contract low set in
October. If this low is broken as support, the bottom of an open
gap on the daily continuation chart at 2.105-2.115 will become the next
downside support. Longer term support is the 1.948 low set by the expired
November 15 contract.
Bottom Line – A breakout failure on Monday puts the market
bulls on the defensive.
Technical Indicators: Moving Average Alignment –
Neutral-Bearish
Long Term Trend Following Index – Bearish
Short
Term Trend Following Index - Bullish
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