The October 14 natural gas contract closed down every single day in last week’s trade holiday-shortened 4 days of trade losing a total of .272 (6.7%).
The October contract closed Friday’s session at 3.793 holding above weekly low support between 3.740-3.760. The market pushed down to a 3.761 overnight low but is currently higher on the day.
Failure to push the market down to new lows early this week could lead to a short-covering rally following last week’s heavy sell off.
The 10 and 40 day moving averages at the 3.910-3.920 area today are primary resistance. A close above both averages are needed to turn the near term trend back higher.
Longer term resistance is a former trend line support on the weekly chart which held as resistance two weeks ago at the 4.101 high. A close back over this trend line will turn the longer term trend back higher.
If 3.740-3.760 support is broken, the trend will remain down with 3.724 and the 3.589 contract low then becoming the next downside support levels.
Friday’s Commitment of Trader’s report showed funds long 196,363 natural gas contracts, down 18,979 from the previous week. Funds were long 395,000+ contracts at the June market high.
Technical Indicators: Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bearish
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