natural gas

natural gas

Monday, February 8, 2016

Natural Gas Corner - Technical Update - Friday's Buying Continues In Monday's Early Trade




Natural gas prices rallied higher in Friday’s session helping to mitigate another rough week for the market bulls.  The spot March 16 contract began last week’s trade sharply lower losing  nearly 15% from the previous week’s close down to a new 7-week low posted on Thursday.

Thursday’s 1.954 low held above the 1.910 contract low posted in December as support which brought in short-covering and new technical buying on Friday.  For the week, the March contract finished Friday’s session at 2.063, losing .235 or 10.2% over the 5 days of trade.

Buying has continued in today’s early trade as the March contract has gapped open to begin today’s session.  The 10 day moving average at 2.120 has been broken as resistance turning the 40 day average at 2.170 into the next upside resistance.

A breakout and close above the 10 and 40 day averages today will turn the near term trend back up with 2.220-2.230 and the 2.315 weekly high being the next upside resistance areas.  A breakout above the January 2.493 high is needed to turn the longer term trend back up.

The gap created on today’s open between 2.076-2.105 is the first area of support today with longer term support at the 1.910-1.954 weekly lows.

Bottom line – Bullish technical signals near term but the longer term downtrend is likely not  yet over.

The fund long position in the natural gas market plunged last week as the market fell to a new 7-week low.  Friday’s Commitment of Trader’s report showed the funds long 43,024 natural gas futures, down 31,131 contracts or 42% from the previous week.

Technical Indicators:  Moving Average Alignment – Neutral-Bearish
                                           Long Term Trend Following Index – Bullish
                                           Short Term Trend Following Index - Bearish

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