A pre-holiday rally on Monday lifted the January 16 natural
gas contract higher by .144 or 8.1% settling the session at 1.911.
Yesterday’s upside strength follows two weeks of heavily
selling which dropped the natural gas market last Friday to a new 14-year spot
contract low at the 1.684 level.
Yesterday’s rally was likely short-covering which should be
followed by a sell off over the next few sessions back toward the 1.684
contract low. If the market does not
quickly sell back off, a near and possibly long term low could be set.
The 10 day moving average broken as resistance on Monday now
becomes the first area of support today at 1.890 followed by 1.780-1.800. Longer term support is the 1.684 contract low
and 1.610, a monthly low from 1998.
Monday’s 1.948 weekly high extending up to the top of the
gap at 1.959 is the first area of resistance today followed by 1.980-2.000. A breakout above 2.000 would turn the 40 day
moving average at 2.250 into the next longer term resistance.
Technical Indicators:
Moving Average Alignment – Bearish
Long
Term Trend Following Index – Bearish
Short
Term Trend Following Index - Bearish
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