The March 16 natural gas contract had a failed rally higher
to begin last Monday’s trade which was followed by four days of selling into
Friday’s close. For the week, the March contract lost .097 (4.7%)
settling Friday at 1.966.
Selling has continues in today’s early trade dropping the
March contract to a new contract low at 1.909. This low is the first area
of support today followed by weekly chart support at 1.780-1.790 and the 1.684
spot contract low set last December.
Former weekly low support at 1.954 is now the first area of
resistance followed by the 10 day moving average at the 2.025 level
today. A close back above the 10 day average is needed to turn the
near term trend back up.
Bottom line – How low can it go?
The hedge funds came back into the market last week adding
to their existing long futures position in natural gas. Friday’s
Commitment of Trader’s report showed the funds long 51,462 contracts, up 8,438
from the previous week.
Technical Indicators: Moving Average Alignment –
Bearish
Short Term Trend Following Index – Bearish
Long Term Trend Following Index - Bearish
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