The natural gas market remains locked in a 3-month sideways price trend that is coiling for an eventual breakout. Intraweek trading ranges continue to narrow which typically occurs near the breakout out point.
Given the longer term trend for the market since May 2014,
the breakout from this sideways range will likely be to the downside toward new
price lows in upcoming trade.
The August 15 contract has been trading in a range during
the month of July between a 2.644 low and a 2.951 high set last Thursday.
A breakout under 2.644 followed by weekly low support levels at 2.569 and 2.588
is needed to trigger a bearish downside breakout. If this occurs, 2.443
and 2.230-2.250 will become the next longer term support levels.
In order to turn the longer term trend up, 2.950-2.977
resistance will first need to be broken followed by the 200 day moving average
currently at 3.080.
Friday’s Commitment of Trader’s report showed the funds long
126,964 natural gas futures contracts, up 14,970 from the previous week.
The funds have largely remained on the sidelines this summer as the market has
been in a sideways price range.
Technical Indicators: Moving Average Alignment –
Neutral-Bearish
Long Term Trend Following Index – BearishShort Term Trend Following Index - Bearish
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