After topping out at a 2.863 high on Wednesday, the
September 15 natural gas contract traded back lower into the close ending a two
day run of higher prices.
The September contract finished the session at 2.798, losing
.014. It also closed back under the 10 and 40 day moving averages at the
lower-2.800 level which turns the near term trend back down.
The next support now becomes last week’s 2.706 low. If
this support is broken, it could initiate heavy selling with 2.650-2.660 being
the next level of support.
Longer term support levels are the 2.590-2.600 weekly lows
set during April and June. A drop under weekly low support would turn
2.440-2.450 and 2.230-2.240 into the next longer term support areas.
The lower-2.800 level now becomes the first area of
resistance followed by yesterday’s 2.863 high.
Bottom line - The natural gas market could be on the verge
of breaking out to the downside from a 3-months sideways trading range.
Technical Indicators: Moving Average Alignment –
Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bearish
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