The August 15 natural gas contract fell back toward the
lower end of the past 8 day trading range on Wednesday bottoming out at a
2.761 low. Daily settle for the contract came in at 2.783, down 1.7%.
With support holding on Wednesday, the August contract has
reversed back higher in the overnight session currently trading back over the
2.800 level.
The August contract remains locked in a sideways range
between 2.730-2.740 support and 2.860-2.870 as resistance. A
breakout from this range is needed to determine the next leg for the market.
A downside breakout under 2.730-2.740 would keep the near
term trend bearish with following support at the 2.569-2.588 weekly lows.
A drop under weekly low support would be a very bearish technical signal for
the market.
If the August contract instead breaks out to the upside
above 2.860-2.870 resistance, the near term trend will turn back up with
following resistance at 2.970-2.980. Longer term resistance is the 3.167
May high which coincides with the 200 day moving average currently at
3.165. A breakout above these two resistance areas is needed to turn the
longer term trend back up.
Technical Indicators: Moving Average Alignment –
Neutral
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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