natural gas

natural gas

Monday, March 21, 2016

Natural Gas Corner - Technical Update - Is The Rally Over?




The natural gas market has closed higher the past two weeks gaining .346 or 21.5% from the early-March 1.611 low up to last week’s 1.957 high for the April contract.

Last week’s high for the April contract was technically important as the 40 day moving average held as resistance during Thursday and Friday’s sessions.   With resistance holding, sellers came in on Friday dropping down the April contract to a 1.907 weekly close.

Selling has continued in today’s session with the 10 day moving average at 1.830 being the next key area of support.  A close under the 10 day average will turn the near term trend back down with following support at 1.750, 1.690-1.700 and the 1.611 contract low.

The 1.940-1.957 level which includes last week’s high, the 40 day moving average, and 3-month trend line remains primary resistance.  A breakout above last week’s high would be a very bullish technical sign near term with the 2.017 low from last December being the next upside resistance.

Bottom line – Is the rally over?

Friday’s Commitment of Trader’s report showed an influx of speculative money coming back into the natural gas market.  The fund long futures position as of last Tuesday’s close was estimated at 47,064 contracts, up 11,828 contracts (34%) for the week.

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

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