The September 14 natural gas contract was heavily sold in
Wednesday’s trade erasing of 6 days of gains in just one
session. Losses for the day amounted to .143 or 3.6% with the contract
settling at 3.831.
Several levels of support were broken yesterday by the
September contract the first being the 10 day moving average at 3.890 followed
by 3.860.
The final level of support near 3.800 has not been broken
and could be an area the trend turns back higher if it continues to hold.
Upside resistance for today begins at the 10 day moving
average at 3.890 followed by the 4.020 weekly high. Longer term
resistance is between 4.050-4.100 which needs to be broken to turn the longer
term trend back higher.
If 3.800 support is broken, the trend will remain down with
3.760 and the 3.725 low set three weeks ago being the next areas of
support. If 3.725 support is broken, the 3.582 low set last November will
become the next downside objective.
Bottom line – Key test of underlying support following
yesterday’s sell off. Failure to break under 3.725 over the next few days
could indicate a market low is in place.
Technical Indicators: Moving Average Alignment –
Bearish
Long Term Trend Following Index – BearishShort Term Trend Following Index - Bullish
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