The October 14 natural gas contract rallied up to a new 6-week high of 4.101 in Thursday’s trade but was unable to break out above week chart trend line resistance.
This trend line was broken as support in mid-July near the 4.000 level. The subsequent rally back higher in retest of former support as resistance held on Thursday and is a bearish technical signal.
The October contract finished yesterday’s session at 4.044, up .041 for the day.
With the October contract currently trading above the 10 and 40 day moving averages, the trend at this point remains sideways to higher. However, a breakout above weekly chart trend line resistance at 4.100 is needed to turn the longer term trend back higher.
The 40 day moving at 3.950 followed closely behind by the 10 day average at 3.940 will remain primary support in upcoming trade. A close under both averages will turn the near term trend back down with following support at 3.900 and the 3.885 weekly low.
Longer term supports are the 3.740-3.760 weekly lows posted over the past month. A drop below 3.740 would keep turn the 3.589 contract low from last November into the next downside objective.
Technical Indicators: Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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