natural gas

natural gas

Monday, April 18, 2016

Natural Gas Corner - Technical Update - Get Ready For Another Boring Session




The May 16 natural gas contract finished another week of very choppy trade on Friday selling back off to end the week.

After topping out at a 2.051 high on Wednesday, the May contract sold steadily off into Friday’s close to settle a 1.902, down .088 or 4.4% for the five days of trade.

The May contract remains in a 4-week sideways range with support coming in at the mid-lower-1.800 area and resistance at the lower-2.000 level.

While the market may push up to a new weekly high in upcoming trade, the primary trend is expected to remain sideways to lower with a likely retest of 1.731 contract low support once the summer seasonal uptrend ends. 

This could take several more weeks of trade before a final drop lower occurs.  Expect upcoming trade to be very similar  to last week’s – choppy and directionless.

Bottom line - Several more weeks of sideways trade expected.

Friday’s Commitment of Trader’s report showed a slight drop in the fund long futures position in the natural gas market.  The fund long position as of the 4/12 close was estimated at 106,280 contracts, down 3,492 from the previous week.  The fund long position quickly rose above the 100,000 contract level during late-March/early-April as speculators attempt to trade the summer rally.  The current position remains well below the 488,901 contract all-time high  reached in February 2012.

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

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