The natural gas market is showing potential for a bullish
reversal in today’s early trade. This recent strength comes after a drop
last week by the October 15 contract to a new contract low.
The October contract which expires on today’s close sold
down to a new contract low at 2.521 last Thursday following release of the EIA
storage report. But after setting the low, the contract rallied up to a
higher close on the day.
The following day, the October contract sold off again
falling to a 2.529 low and closing Friday at 2.564, down .027 for the day and
.041 for the week.
Last week’s 2.521 low was technically important as it held
above the 2015 spot contract low at 2.443 set in early-May. The inability
to push the market down to a new low for the year has brought in
short-covering and renewed buying today.
Last week’s 2.607 high and the 10 day moving average at
2.615 has been broken as resistance in the overnight trade. A close above
the 10 day average will turn the near term trend back up with 2.690-2.700 being
the next upside resistance.
A close under 2.600 today will keep the near term trend down
with last week’s 2.521 low being the first area of support followed by 2.443.
Friday’s Commitment of Trader’s report showed the funds long
99,859 natural gas futures, down 6,973 from the previous week. Funds have
held a fairly small position in the natural gas market as prices have remained
near lows for the year.
Technical Indicators: Moving Average Alignment –
Neutral-Bearish
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bearish
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