Natural gas prices rallied up to a 4-month price high in early trade last Friday but fell sharply lower into the close ending another volatile week in the market.
The December 14 contract began last week’s trade with a gap higher open on Monday gaining nearly 8% for the day. Buying continued into Friday’s open as the contract topped out at a 4.532 morning high. The market could not, however, breakout above 4.544 weekly high resistance set two weeks ago which reversed prices back lower into Friday’s close.
The December contract ended the week at 4.266, well below Friday’s intraday high, but still up .246 or 6.1% for the 5 days of trade.
All of last week’s gains have been erased overnight as the December contract is trading back near the lower-4.000 level in overnight trade.
The current low of 4.006 is the first area of support today which is near the 40 day moving average at 4.025. Longer term support is the low set two weeks ago at 3.931.
The 4.076 overnight high is the first area of resistance followed by the top of the open gap at 4.233 which coincides with the 10 day moving average at 4.220.
The market has fallen back lower today after failing to clear 4.450-4.500 resistance in last week’s trade. The seasonal trend for the market suggests weakness should be bought.
The funds have remained largely on the sidelines over the past 3 weeks as the market has entered into a volatile period of trade. Friday’s Commitment of Trader’s report showed the funds long 147,520 natural gas contracts, up 1,936 from the previous week.
Technical Indicators: Moving Average Alignment – Neutral
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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