Natural gas prices rallied back higher on Friday helping to
ease the steep losses suffered earlier in the week by the new spot month June
16 contract.
The June contract topped out at a 10-week high of
2.304 in last Monday’s session but sold off over the following 4 days to a
2.054 low during Thursday’s session.
A rally higher on Friday from 40 day moving average support
added .100 or 4.8% to the June contract which settled the day at 2.178.
For the week, the June contract lost .089 or 3.9%.
The June contract remains in a sideways to higher trading
range which now enters into a 9th week after bottoming out at a 2016
and contract low of 1.844 in early-March.
Selling has come back into the market overnight erasing roughly
70% of Friday’s gains. The 40 day moving average at 2.070 today following
closely behind by last week’s 2.042 low remains primary support. Longer
term support is between 1.950-1.970 followed by the 1.844 contract low.
Last Friday’s 2.195 high is the first area of resistance
followed by the 2.304 high posted last Monday. Longer term resistance is
the 200 day moving average currently at 2.470.
Bottom line – Is the summer rally over?
Funds continue to move money into the natural gas market as
evidenced by Friday’s Commitment of Trader’s report. The report estimated
the fund long futures position as of last Tuesday’s close at 131,884 contracts,
up 15,729 contracts from the previous week.
Technical Indicators: Moving Average Alignment –
Neutral
Long
Term Trend Following Index – Bullish
Short Term Trend Following Index - Bearish
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