The natural gas market on Tuesday suffered its largest one day sell off since last February when the market was setting a winter high.
The October 14 contract was down in early trade yesterday with selling momentum increasing after 10 and 40 day moving average support was broken. By the end of the session, the October contract had lost .175 or 4.3% settling the day at 3.890.
Daily settle below the 10 and 40 day moving averages turns the near term trend back down. The 40 day average at 3.935 is the first area of resistance today followed by the 10 day average at 3.950.
Longer term resistance is last week’s 4.101 high. This area is a former trend line support on the weekly chart which held as resistance last week. A close above this trend line is needed to turn the longer term trend back higher.
Key support levels to watch are the 3.740-3.760 lows posted over the past 5 weeks. If this support is broken, the 3.589 contract low set last November will become the next downside objective.
Technical Indicators: Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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