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Technical update on NYMEX Natgas Futures 24/08/2012

Published Friday, August 24th, 2012

The contract has been between strong support and resistance levels for quite some time therefore it is in a range-bound condition. A quick look at the continuation daily chart reveals that the 200-day continuation M/A, currently at 2.686 has been tested seven times during the last eight sessions, eventually broken but never closed below. Additionally, recent daily lows have been between 2.682 and 2.685 making this area a crucial support level. Only a close below 2.682 is a sell. On such a close the contract should target the 100-day continuation M/A at 2.574.

On the upside the daily highs on the September contract on August 14 and 15 were 2.848 and 2.840 respectively. Just above them is the 61.8% retracement level of the June-July rally from 2.259 to 3.277 at 2.888. The 2.840/48 resistance area has been broken but not closed over yesterday whilst the 2.888 c/p has not even been tested. The latter must be closed above to have targets higher. This resistance is made even stronger by the 5 and 8-week M/As at 2.835 and 2.864. If they are closed above tonight then not only the daily but the weekly technical picture will turn positive, too. In that case we should see a rally up to the 38.2% weekly correction point of the June 2011-April 2012 downtrend from 4.983 to 1.902 at 3.080. Until some kind of technical break-out takes place, it is probably best to wait-and-see.

Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.