A post-EIA report rally higher by the January 15 natural gas contract on Thursday topped out just below 10 day moving average resistance. As resistance at the upper-3.700 level held, the market traded back lower into the close.
All of Wednesday’s gains were negated by Thursday’s close as the January contract lost .072 or 1.9% to settle at 3.634.
The market may be forming a bullish “higher low” between this week’s 3.585 low and the 3.541 low set last October. The October low has now held as support the past four sessions and could mark a turning point back higher.
The 10 day moving average which held as resistance on Thursday is at 3.745 today and is the first level of resistance followed by the 3.785-3.825 highs set over the past two weeks.
A breakout above the lower-3.800 level would likely indicate a near term low has been set.
If resistance holds, a breakout under 3.541-3.585 weekly low support is needed to keep the downtrend intact. If broken, late-2013 lows between 3.380-3.400 will become the next downside support level.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bearish
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