Since bottoming at a 2.567 contract low on February 6th, the March 15 natural gas contract has been moving steadily higher and is poised to test “breakout” resistance pin today’s trade.
The March 15 contract reversed course in Wednesday’s session rallying back higher from 10 day moving average support to close at 2.831, up .072.
Buying has continued in today’s early trade moving the March toward a key resistance area that begins at the 40 day moving average at 2.880 and extends up to 2.910.
A breakout above this resistance would be the first time the March contract has traded above the 40 day average since last November. It could also indicate a seasonal low has been set with 2.980-3.020 becoming the next upside resistance.
If resistance holds, the 10 day moving average which has been primary support over the past 4 sessions will be the first area of support at 2.720. A close under the 10 day moving average would turn the near term trend back down with the 2.656 weekly low becoming the next support followed by the 2.567 contract low.
Bottom line – A key technical test for the natural gas market today. Failure to breakout above 2.880-2.910 resistance could lead to a quick sell off back lower.
Technical Indicators: Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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