Over the past 2 months, the August 15 natural gas contract
has alternated in a sideways range trading between the 2.569 contract low set
in late-April and the 3.167 high posted in mid-May.
Over the past 4 weeks, the trading range has become tighter
with the August contract trading between a 2.588 low and a 2.977 high.
Over the past 8 days, the trading range has become even more
narrow as the August contract has traded in a .136 range.
The market is primed for a breakout from this sideways
range. Given the longer term trend for the market since May 2014, the
breakout will likely come to the downside under 2.569-2.588 weekly low support.
Near term support is at the 2.730-2.740 level with
resistance at 2.860-2.870 (40 day moving average and 2.869 weekly high)
followed by 2.970-2.980. Longer term resistance is the 200 day moving
average currently at 3.170 which is the level the market last topped in
mid-May. A breakout above these two resistance levels is needed to turn the
longer term trend back higher.
Technical Indicators: Moving Average Alignment –
Neutral-Bearish
Long Term Trend Following Index – BullishShort Term Trend Following Index - Bullish
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