The natural gas market gapped higher on Monday’s open and remained well bid into the close gaining nearly 8% on the day.
The spot December 14 contract initially held below 10 day moving average resistance at 4.195 in early trade. But as resistance was broken midday, the contract gained another .140 to top out at a 4.347 high and settling just below at 4.341. For the day, the December contract was up .321 (7.9%).
The December contract has now moved back toward the upper end of the 4-month trading range at the 4.250-4.300 level. It briefly broke out over this resistance two weeks ago but was unable to sustain the gains.
The primary trend remains sideways to higher with the 10 day moving average at 4.230 broken as resistance yesterday being the first level of support today.
An gap created on yesterday’s open between 4.074-4.113 is the next layer of support followed by the 40 day moving average at 4.010.
Monday’s 4.347 high followed closely by the 200 day moving average at 4.400 are the first two resistance levels today. Longer term resistance is the 4.544 high set last week.
The start to the winter 14-15 seasonal rally has been one of the most volatile since the Nymex natural gas contract was listed. This period of increased volatility is likely a sign of what to expect in upcoming trade.
While the final seasonal low for 2014 was assumed to have been set in late-October, deep setbacks similar to what occurred last week in the market between rallies could become commonplace.
Technical Indicators: Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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