For a second day in a row, the August 16 natural gas
contract attempted an early morning breakout above 10 day moving average
resistance. On Monday, the rally reached
2.799 high before turning back lower.
In yesterday’s trade early buying rallied the August
contract up to a 2.787 high before sellers came back in dropping the contract
to a 2.728 daily settle, up 6 ticks on the day.
Two failed rally attempts over the past two days has been
followed by selling in today’s early session as the August contract tests two
key areas of support. The first area of
support is the 2.669 low set last Friday followed closely behind by the 40 day
moving average at 2.655.
A close under both areas of support will turn the market
trend back down with the 200 day moving average currently at 2.450 then
becoming the next longer term support.
The 10 day moving average is the first area of resistance
today at 2.740 followed by the 2.799 weekly high. A close back above 2.799 today will turn the
near term trend back up with 2.871 being the next area of resistance followed by
the 2.998 early-July high.
Bottom line – Two failed rally attempts this week puts the
bulls on the defensive.
Technical Indicators:
Moving Average Alignment – Neutral-Bullish
Long
Term Trend Following Index – Bearish
Short Term Trend Following Index - Bearish
Asian markets are trading subdued in early trade on Tuesday. Hong Kong's Hang Seng has advanced 25 points. China’s Shanghai Composite has dipped 1 point and Japan’s Nikkei 225 has edged down 13 points.capitalstars
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