The new front month August 16 natural gas contract traded
sharply higher on Tuesday following a breakout above lower-2.800 resistance
early in the day. By the session’s close, the August contract had gained
.149 (5.4%) settling the day at 2.890.
While there is no sign of a top forming in the market,
recent parabolic trade is indicative of a blow off top which comes near the end
of a price move.
The 2.950-3.050 area is a strong resistance level on the
weekly chart and the level the market topped during the summer of 2015.
The 2.865 overnight low is the first area of support
today followed by the previous high at 2.812. Longer term support is the
10 day moving average at 2.760. A close back under this average will
likely signal a top has been set.
Bottom line – Blow off top in progress?
Technical Indicators: Moving Average Alignment –
Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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