The failure to close above 10 day moving average resistance on Tuesday by the September 14 natural gas contract was followed by a sell off back lower in yesterday’s trade.
The 10 day moving average held as resistance at the 3.888 high day in early trade on Wednesday resulting in light selling into the close. The September contract finished the day down at 3.823, down .054 for the session.
An overnight rally has reversed the market back higher in early trade today with the September contract topping out at a 3.955 morning high. The market has since back off this high and is currently trading at 3.880 which is coincidentally the 10 day moving average.
A breakout above the 40 day moving average at 3.995 and last week’s 4.020 high is now needed to put the bulls back in control of this market which has posted a potentially bullish “higher low” reversal in this week’s trade.
If the October contract can break out over resistance at the lower-4.000 level, the second and final seasonal low for 2014 should be in place.
If resistance holds, Wednesday’s 3.792 low is the first area of support followed by the 3.725-3.727 lows set over the past three weeks. A drop under 3.725 would keep the primary market trend down with following support at 3.650 and the 3.582 contract low.
Moving average alignment remains bearish but both the short and long term RMI trend following indexes are now bullish.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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