The May 16 natural gas contract rallied up to a new 10-week
high at the 2.176 level in Monday’s early trade also briefly moving above upper
channel trend line resistance.
However, the breakout failed to hold as sellers came back in
by mid-morning dropping the May contract to a 2.063 daily settle, down .077 or
3.6%.
A bearish dark cloud cover Japanese candlestick was posted
on Monday and has been confirmed with lower trade today. The 10 day
moving average at 2.030 is the first area of support today with key longer term
support between 1.940-1.960.
1.940-1.960 represents both lower channel trend line as well
as the 40 day moving average supports. A close under this support area
will turn the longer term trend back down likely leading to a retest of the
1.731 contract low.
A breakout above 2.170-2.180 will keep the near term uptrend
in place with following resistance at the 2.200-2.210 area.
Bottom line – Bulls back on the defensive following Monday’s
failed upside breakout.
Technical Indicators: Moving Average Alignment –
Neutral-Bullish
Long
Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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