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Did Natural Gas Really Form a Bottom?

Rod David

The following are the latest daily summaries of my ongoing intraday coverage, providing context to interpret price action. Any prices listed are for a contract's current "front month." Their direction tends to correlate with any ETFs listed for each.

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Today's Highlight: Natural gas didn't wait for probing its lows before threatening to end the week sharply higher. Of course, Monday's surge might have borrowed too heavily from improving later in the week, without first trapping new shorts, so a rally isn't yet assured.

Dollar Basket
Jun Contract DX; (UUP), (UDN)
Despite Monday morning's tending to duplicate Friday's bias, prior lows held as support. It's not a buy signal, but it does undermine the decline.

Eurodollar
Jun Contract EC; (FXE)
Still ranging narrowly around 1.3333 Monday, while also fulfilling the likely probes of fresh highs. Back under 1.3303 would signal momentum reversing down.

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Gold
Aug Contract GC; (GLD)
Monday's dip back down under 1383.00 helps to confirm that Friday's surge didn't gain traction, more so since it didn't extend immediately this week above 1393.50. But extending down forcibly under 1377.00 and 1373.00 would be more helpful to resolving the pattern down.

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Silver
Jul Contract SI; (SLV)
Not extending higher immediately Monday kept alive the attraction back down to 21.60 and lower, which Monday's gap down quickly fulfilled.

30-Year Treasury
Sep Contract US; (TLT)
The reaction down from last week's 140-25 target extended Monday to within a few ticks of its 139-22 signal. There is no new pattern.

Crude Oil
Jul Contract CL; (USO)
The 98.10 target did not immediately reject price down, so it will likely be exceeded by extending the rally to 100.80 and 102.00 so long as pullbacks now hold 97.05.

Natural Gas
Jul Contract NG; (UNG), (UNL)
Gapping back up Monday above 3.80 already suggested (in the strongest of terms) that Friday's break under 3.77 wasn't going to test new lows at 3.55-3.60. Extending higher to close above last week's 3.85 high then signaled momentum reversing up. But pullbacks must hold 3.83, and Tuesday must extend higher to confirm the reversal. Otherwise, closing back under 3.80 - or just dipping intraday - would reject Monday's bounce in a very big way.
Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com.

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