The December 14 natural gas contract traded higher for a seventh consecutive day on Wednesday topping out at a new 4-month high of 4.315 in early trade.
The contract settled well below the intraday high falling back to 4.194 by the close, up .065 for the day.
Yesterday’s intraday high came above previous highs of 4.246 and 4.252 set over the past 3 months. But it held below a trend line resistance on the weekly chart which has now been tested 4 times over the past 3 months.
If trend line resistance continues to holds, the trend could shift back lower in a downside correction following recent gains. Yesterday’s 4.132 low is the first area of support today with longer term support at the 40 day moving average currently at 4.000 and the 10 day average at 3.910.
Given recent gains in the market which have totaled .443 or 12% over the past 7 days, the downside correction, if it does come, could be quite volatile.
Longer term, the second and final seasonal low for 2014 was likely set at last week’s 3.620 low. A breakout above yesterday’s 4.315 would turn the longer term trend back higher.
Technical Indicators: Moving Average Alignment – Neutral
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bullish
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