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December Natural Gas Bounces Off Long-Term Support11/18/02 11:37:35 AM
by Kevin Hopson
December natural gas (NGZ2) has seen a sharp sell off over the last few weeks, as weakness in the crude oil futures market has weighed on prices. However, the contract successfully tested key long-term support in the $3.72 to $3.76 range last week.
|As you can see in the chart below, the $3.72 to $3.76 range is the site of August's correction and September's low. Coupled with the contract's 200-day moving average, which currently resides at $3.81, this area of support was considered significant.|
|As chance would have it, December natural gas successfully bounced off support here last week and has now broken to the upside. More specifically, the contract broke a double top in the $3.94 to $3.96 range last Friday, giving a short-term buy signal in the process. Though December natural gas bounced off the 38.2 percent retracement level ($4.03) from October's high to November's low last Friday, this was labeled as minor resistance, the reason being that there were no other technical resistance points close to this price level.|
|Graphic provided by: SuperCharts.|
|Being the case, it was no surprise to see December natural gas rally on Monday, as the contract easily overcame the 38.2 percent retracement level from the October-November sell off. If December natural gas can close above the $4.12 level, site of the 50 percent retracement from the October-November sell off and the contract's 50-day moving average, this would be very bullish. Additionally, a break of key resistance at the $4.21 level, site of the 61.8 percent retracement, could lead to a longer-term price target of $4.34. This is currently the site of the contract's downtrend line from October's high.|
Kevin has been a technical analyst for roughly 10 years now. Previously, Kevin owned his own business and acted as a registered investment advisor, specializing in energy. He was also a freelance oil analyst for Orient Trading Co., a commodity futures trading firm in Japan. Kevin is currently a freelance writer.
|Glen Allen, VA|
|E-mail address: ||email@example.com |
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