The April 16 natural gas contract has moved up to a new
1-month high in today’s early session as it tests an important area of
resistance.
This resistance is the 40 day moving average at the 1.955
level today. Yesterday’s rally topped out at a 1.952 high. A
breakout above the 40 day average would be another bullish technical signal for
the April contract turning the 2015 contract low at 2.017 into the next upside
resistance.
With the April contract closing higher 9 out of the past 10
trading sessions, profit-taking might become a factor in today’s session if 40
day moving average resistance isn’t broken.
Former resistance between 1.885-1.900 now becomes the first
area of support followed by the 10 day moving average at 1.820. A close
under the 10 day average will turn the trend back down.
Longer term, a retest of the 1.611 contract low is
expected once a top forms on this current rally.
Bottom line – A key test of upside resistance in today’s
session.
Technical Indicators: Moving Average Alignment –
Neutral-Bearish
Long Term Trend Following Index – Bearish
Short
Term Trend Following Index - Bullish
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