A short-covering rally in the natural gas market last week lifted the May 15 contract from a 2.475 contract low set on Monday to a 2.693 high by Friday.
The rally came to an end by Friday’s close as the May contract fell back to a 2.634 close losing .050 on the day. For the week, the May contract was up .123 or 4.9%.
As noted last week, short-covering rallies higher are typically followed by an equally large sell off back lower. Friday’s lower close has been followed by a gap down open in the overnight session below 10 day moving average support at 2.590.
Former resistance between 2.540-2.550 now becomes the next support level followed by the 2.475 contract and 2015 spot low set last Monday.
The overhead gap between 2.596 (overnight high) and 2.625 (Friday’s low) is the first area of resistance followed by last week’s 2.693 high.
Current weakness is expected to be the final leg down for trend before a post-winter seasonal low is set.
Friday’s Commitment of Trader’s report showed funds once again exiting the natural gas market. The current long fund futures position as of last Tuesday’s close was estimated at 97,679 contracts, down 10,472 from the previous week.
Technical Indicators: Moving Average Alignment – Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bullish
No comments:
Post a Comment