natural gas

natural gas

Friday, May 20, 2016

Natural Gas Corner - Technical Update - Update On Wednesday's Bearish Breakout



The June 16 natural gas contract broke out to the downside on Wednesday from an upsloping price channel as shown on the daily continuation chart.



Selling continued on Thursday as the June contract pushed down to a 1.952 morning low.  However, weakness didn’t hold as buyers came back in rallying the contract to a 2.039 daily settle, up .038.



Yesterday’s session ended with a higher close but the June contract held under former channel trend line support as resistance at  the 2.052 daily high which keeps Wednesday’s bearish breakout viable.



In order for the near term trend to remain down, the June contract will need to hold under lower channel resistance at the 2.050-2.060 level today. 



A breakout and close back above 2.060 would likely negate Wednesday’s breakout turning the near term trend back up.  Failed breakouts typically lead to a volatile reversal in the market price in the opposite direction which in this case would be back higher.



Bottom line - The next few days of trade should give an indication as whether or not market direction has in fact turned back lower.



Technical Indicators:  Moving Average Alignment – Neutral-Bearish

                                         Long Term Trend Following Index – Bullish

                                         Short Term Trend Following Index - Bearish

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