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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