A higher open last Monday by the July 16 natural gas
contract topped out at a 2.271 high before steadily selling off into Friday’s
close. For the week, the July contract lost .038 or 1.7%settling
Friday at 2.169.
The July contract bottomed out at a 2.101 low last Thursday
holding above 2.080 weekly low support.
With support holding again, buyers have reemerged in
this week’s trade rallying the July contract up to 40 day moving average
resistance at the 2.220 level.
A breakout above the 40 day average will turn the near
term trend back up with following resistance at last week’s 2.271 high and the
2.327 early-April high. Longer term resistance is the 200 day moving
average currently at 2.440 which coincides with the 2.427 March high.
This rally could lift the July contract back toward the
upper end of the past 3-month trading range. However, strength should
continue to be sold with the expectation for a retest of the 1.939 contract low
later this summer.
Bottom line – Short-squeeze in progress with weekly low
support holding again last week.
Friday’s Commitment of Trader’s report showed a decline in
the long futures position held by the funds in the natural gas market.
The long position as of the 05-24 close was estimated at 108,237 contracts,
down 16,733 from the previous week.
Technical Indicators: Moving Average Alignment –
Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bearish
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