Technical Analysis Natural Gas 6/16/15

A storm that is brewing in the Gulf of Mexico along with warmer than normal temperatures forecast by the Nation Oceanic Atmospheric Association has buoyed natural gas prices 5% on Monday as warmer weather lifted prospects for cooling demand.

The technicals are attempting to turn and as the Gulf storm emerges, price could remain volatile.  Price action has turned higher running into resistance near a short term downward sloping trend line at $2.89.  A daily close above this level would test a medium term trend line that has been robust support since November of 2014 and comes in at $3.01.  This target level of resistance coincides with the first Fibonacci retracement level at $3.05. The following 50% and 61.8% retracements are 3.21 and 3.37 respectively. Support is seen near the 20-day moving average at $2.80. 

Momentum has turned positive, with Monday’s surge in price action.  The MACD (moving average convergence divergence) index generated a buy signal.  This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread.  The MACD moved from negative territory to positive territory confirming the buy signal.