The September 14 natural gas contract has broken out
above 3.980 resistance in the overnight session. If the breakout holds,
it would be further confirmation that a low has been set in the market.
In last week’s trade, the market was choppy but moved
steadily higher into Friday’s close gaining .164 (4.3%) for the week to close
Friday at 3.962.
The breakout overnight above 3.981 weekly high resistance
turns mid-July lows between 4.080-4.100 into the next upside resistance
followed by the 40 day moving average at 4.145.
3.980-3.981 now becomes the first area today followed by the
10 day moving average at 3.875. A close below the 10 day moving average
would turn the near term trend back down.
Hedge funds which were near record long the natural gas
market on the mid-June highs have been actively liquidating as the market
reached a new 2014 low. Funds last week sold a whopping 48,121 contracts
according to the COT report released on Friday. The current fund long
position (futures only) as of last Tuesday’s close was 200,376 contracts.
Technical Indicators: Moving Average Alignment –
Neutral-Bearish
Long
Term Trend Following Index – BearishShort Term Trend Following Index - Bullish
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