The two day rally earlier this week which lifted the February 15 natural gas contract higher by near 20% appears to be short-covering squeeze rather than the beginning of a new move higher but it is still too early to tell.
In yesterday’s trade, the February contract pushed up to a 3.352 high following release of the weekly storage report but couldn’t hold onto the gains. The contract fell as low as 3.057 by mid-day trade but moved higher into the close settling at 3.158, down .075 or 2.3%.
A bearish harami candlestick formed on yesterday’s bar which has been confirmed by lower trade this morning. A drop under the 10 day moving average at 2.980 today will turn the near term trend back down with support again becoming the 2.750-2.783 area from which the latest rally began.
The past two daily highs at 3.337 and 3.352 are primary resistance followed by the 40 day moving average at 3.520.
Technical Indicators: Moving Average Alignment - Neutral-Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bullish
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