The April 16 natural gas contract began last week’s trade with a sharp selloff on Monday and trended down in Thursday’s close finishing the session at 1.806. For the holiday-shortened week, the contract was down .101 or 5.3%.
The 2-week rally which began at the 1.611 contract low set
in early-March failed under trend line and 40 day moving average resistance at
the 1.957 weekly high. This resistance is currently at the 1.880-1.920
area and remains primary resistance.
A breakout above lower-1.900 resistance would be a bullish
signal for the market turning 2.017 into the next upside resistance.
The 1.766 overnight low extending down to 1.750 is the first
area of support followed by 1.690-1.700 and the 1.611 contract low.
While the market may have one more leg higher on this
current seasonal rally, the longer term outlook is for an eventual test of
contract low support by the later-dated summer 2016 contracts.
Bottom line – The April contract may be ready for another
retest of lower-1.900 “breakout” resistance in this week’s trade.
The fund long position in the natural gas market jumped by
nearly 50% in last week’s trade. Friday’s Commitment of Trader’s report
showed the fund long futures position as of 3/25 at 70,241 contracts, up 23,177
(49%) from the previous week.
Technical Indicators: Moving Average Alignment –
Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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