The July 16 natural gas contract rallied up to a new 5-month
high at 2.635 on Monday tying the previous high for year set in January.
With yearly high resistance holding, the July contract
traded sideways to lower into the close finishing the session at 2.585, up
.029.
The market may be ready for a pullback following a two week
rally which lifted the July contract higher by .534 or 25%. The 10 day moving
average currently at 2.490 should be tested in upcoming trade. Whether or
not this support holds will be a key technical test for the market.
Much of the buying support that came into the market last
week materialized on the breakout above the 2.495 yearly high. A drop
back under this level could initiate liquidation selling with following support
at the 200 day moving average currently at 2.425.
A rally above the 2016 contract high at 2.635 is needed to
keep the near term trend bullish with the next level of resistance being
2.680-2.700.
Bottom line – 2016 contract high resistance holds on
Monday. Near term or long term top?
Technical Indicators: Moving Average Alignment -
Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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