A strong rally higher earlier in the week by the October 14 natural gas contract has been followed by heavy selling over the past two sessions erasing most of the early week gains.
Much of the selling came in yesterday’s session during which the October contract lost .131 (3.3%) settling at 3.823.
With lower-4.000 resistance holding for a third time this week at Tuesday’s 4.016 high, the momentum is tilted back toward the downside with key support at the 3.740-3.760 weekly lows.
Similar to upside resistance, this downside support area has held on three previous occassions the latest being this week on Monday’s 3.761 low.
A drop under this support will keep the primary trend down and turn the 3.500-3.550 area into the next longer term support.
The 10 and 40 day moving averages again become upside resistance with the 10 day average at 3.885 followed closely behind by the 40 day average 3.890. 10, 40 and 200 day moving average alignment is now bearish.
Bottom line – The market is trading back toward the lower end of a now 8-week sideways range. Can 3.740-3.760 support hold for a fourth time?
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bearish
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