The August 16 natural gas contract began last week’s
holiday-shortened week of trade with a steep selloff falling from a new
10-month high of 2.998 reached the previous Friday.
The selloff dropped the August contract to a 2.697 low on
Wednesday which was followed by a sideways to higher trend into Friday’s close
settling at 2.801. For the week, the August contract lost .186 or 6.2%
closing down on a weekly basis for the first time in 7 weeks.
The August contract is currently higher in today’s session
testing 10 day moving average resistance at the 2.835 level. A close
above this average today will turn the near term trend back higher with
2.950-3.000 being the first area of resistance followed by weekly high
resistance from May 2015 at the 3.105 level.
Last week’s 2.697 low remains primary support followed by
2.650 and the 40 day moving average currently at 2.580.
This week’s trade will be technically important after last
week’s heavy sell off. There is a chance a summer high has been set but
the market will need to see lower trade this week to confirm topping action is
in progress.
Bottom line – Is a summer price high in place?
The funds long futures position in the natural gas market
fell slightly last week according to the Commitment of Trader’s report released
on Friday. The position as of the 07/05 close was estimated at
136,701 contracts, down 2,297 from the previous week. The funds
have been slowly building a long position over the past 5 weeks.
Technical Indicators: Moving Average Alignment –
Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bearish
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