The November 14 natural gas contract broke out under a key area of support in yesterday’s trade at the 3.860-3.870 level. This could be the beginning of a push down to a new price low following 12 weeks of sideways trade.
The November contract on Wednesday was heavily sold from the opening bell losing .102 or 2.6% to settle at 3.855.
The July 3.786 low extending up to the lower-3.800 area where the market bottomed several times over the past 3 months now becomes the next area of support for the November contract. A drop under 3.786 would turn 3.720-3.730 into the next downside support followed by the 3.658 contract low set last November.
When a market breaks out from a sideways range, the measuring objective from the breakout is equal to the distant between the top and bottom of the previous range. In this case, the trading range over the past 3 months has been roughly .350. Therefore, the November contract could trade down to the 3.500-3.550 level before a final low is set for this current trend.
Technical Indicators: Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bearish
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