October Natural Gas futures are edging lower in mid-session trading Tuesday after being rejected by the 50-day moving average at $2.915 earlier in the session. Based on the price action over the past four sessions, the 50-day moving average appears to be the key indicator controlling the direction of the trade.
A sustained move over the 50-day moving average could launch a strong rally into last week’s high at $2.990. A move through that price could extend the surge into the intermediate retracement zone at $3.044 to $3.133. This is the last potential resistance before the 200-day moving average at $3.396.
A sustained move under the 50-day moving average would indicate sellers are still in control. This could lead to a retest of the short-term retracement zone at $2.829 to $2.791. This is the last potential support before the three main bottoms at $2.747, $2.685 and $2.668.
Despite Tuesday’s rejection at the 50-day moving average, the main trend remains up on the swing chart. That keeps buyers in buy-the-dip mode as long as the retracement zone holds.
The Heat Has Not Left Yet
Forecasts still show near-record temperatures across the South, East and parts of the East Coast through the end of this week. Air conditioners are still running in the major population centers at a time of year when cooling demand normally starts dropping off. Power generators are still in the market for gas.