A short-covering rally in the natural gas market last week lifted the February 15 contract higher by nearly 20% in just two days of trade.
But after topping out at a 3.351 high on Thursday, the February contract traded lower into Friday’s close finishing at 3.127. The market posted the first weekly gain in 2 months settling up .181 or 6.1% for the five days of trade.
Selling has continued in Monday and Tuesday’s combined sessions dropping the February contract sharply lower in today’s trade. The 10 day moving average at 2.985 has been broken as support which turns the near term trend back down.
Last week’s 2.783 contract low extending down to 2.750 weekly low remains key support. A drop under 2.750 would turn the 2.585 low from August 2012 into the next downside price objective.
Funds continue to exit the natural gas market with Friday’s Commitment of Trader’s report showing funds long 96,813 futures, down 10,191 contracts or 9.5% from the previous week. Funds were record long 488,901 contracts last February.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bullish
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