The new front month October 14 natural gas contract broke out and closed above the 40 day moving average for the first time since June 18th, just 2 days after the current 2014 high was set.
In Wednesday’s session, the October contract gained .054 (1.3%) settling at a new 6-week high of 4.003.
The near term trend remains up with formidable resistance expected between 4.040-4.100. 4.041 is the weekly high set two weeks ago followed by 4.100 which is a former weekly trend line support.
This trend line was broken in mid-July near the 4.000 level resulting in a further sell off to an eventual 3.724 low. A close back above 4.100 is needed to turn the longer term trend back higher.
The 40 day moving average broken as resistance yesterday now becomes the first area of support today at 3.960 followed by the 10 day average at 3.915.
A drop back under these two average would turn the near term trend back down with following support at the 3.740-3.760 weekly lows and the 3.589 contract low posted last November.
Technical Indicators: Moving Average Alignment – Neutral
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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