After gaining 4.4% on Monday, the July 15 natural gas contract tacked on an additional .141 or 5.2% in yesterday’s session bringing the two day total gain to a whopping 9.6%.
The July contract also closed above the 40 day moving
average on Tuesday settling at 2.846 which turns the longer term market trend
back up.
It is interesting to see how quickly a market trend can turn
as last week the price trend was decidedly bearish. What changed
was the inability last Thursday to drop the market to a new price
low. What instead happened was the July contract bottomed out at a 2.552
low last week holding above the previous 2.540 contract low set in late-April
establishing a double bottom reversal in the market.
What began as short-covering on Monday as turned into a
bullish stampede on Tuesday as buyers have rushed in over the past two
days which has extended into today’s early trade.
2.940-2.950 is the next upside resistance above the current
2.922 overnight high with longer term resistance at the lower-3.000
level. There have been three rally attempts dating back to last February
into the lower-3.000 level all of which have failed the most recent in May as
the July contract topped out at a 3.150 high. A breakout
above resistance at the 3.000-3.200 level which includes the 200 day moving
average would be a very bullish technical event for the natural gas
market.
Support for today begins at the 40 day moving average at
2.795 with longer term support at the 10 day average currently at 2.700.
A drop back under both averages is needed to turn the trend back down.
Technical Indicators: Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bearish
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