The November 14 natural gas contract has now closed higher three consecutive sessions and has moved up to a new 1-month high in the overnight session.
Most of the gains made over the past three days came during Monday’s trade during which the November contract moved sharply higher gaining .125 (3.1%) to settle at 4.154.
The new 1-month high of 4.172 posted overnight is 9 ticks above the previous 4.163 high set in August but follow through buying so far has been absent.
A breakout above 4.172 up to 4.200 would be a very bullish indicator for the market likely turning the longer term trend back higher. The next area of resistance above 4.200 is the 200 day moving average at 4.355.
If resistance holds, 4.100-4.110 will become the first area of support with longer term support at the 10 and 40 day moving averages currently at 4.005 and 3.990.
This is a big technical test of resistance currently in progress and may be the beginning of the winter rally back higher. But if resistance holds as it has over the past 11 weeks, the market could be in for a big sell off back lower.
Technical Indicators: Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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