Natural gas prices rallied sharply higher for a third day on
Wednesday as short covering and new technical buying keep the market well bid.
The spot July 16 contract tacked on an additional .093 or
4.1% on Wednesday settling at 2.381, and is up .307 or 14.6% from last Friday’s
2.101 low up to the 2.408 overnight high.
The July contract is approaching a key support area at the
lower-2.400 area which includes the 200 day moving average at 2.440 as well as
previous daily highs.
There is a good chance that 2.400-2.450 resistance will not
be broken capping the current rally.
However, if the July contract does breakout above this resistance, the
2016 high set in early-January at 2.635 will become the next longer term resistance.
Former resistance between 2.320-2.340 now becomes the first
area of support followed by the 40 day moving average currently at 2.240.
Bottom line – Will lower-2.400 resistance cap the rally?
Technical Indicators: Moving Average Alignment – Neutral-Bullish
Long
Term Trend Following Index – Bearish
Short Term Trend Following Index - Bullish
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