natural gas

natural gas

Monday, July 11, 2016

Natural Gas Corner - Technical Update - Topping Action Or Correction?




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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