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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