Natural Gas Surge Almost Confirms That the Recent Decline Was Only a Correction

By Rod David  DEC 05, 2012 2:25 PM

Take a look at the intraday action in commodities.


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.

Today’s Highlight: Natural gas had been probing lower and lower lows without there first having been a distributive pattern. Proof that buyers remain strong came from Wednesday’s gap up that extended sharply higher intraday. Closing higher Thursday could complete a base capable of launching a strong rally.

Dollar Basket
Tuesday’s probe under the decline’s 79.75 target did not extend lower Wednesday. The gap up did not extend higher, either, as the session ranged around 79.75. Not resuming the decline immediately would be bullish.

Dec Contract EC; (NYSEARCA:FXE)
Tuesday’s probe above the rally’s 1.3050 target did not extend higher Wednesday. The gap down did not extend lower. But it probably will, unless the rally were to resume without delay Thursday.

Feb Contract GC; (NYSEARCA:GLD)
Tuesday’s sharp decline extended lower Wednesday to 1686.00, but Tuesday’s 1692.50 prior low was recovered. Recovering 1698.00 would start to signal the drop had ended, targeting at least a corrective bounce up to 1710.00.

Mar Contract SI; (NYSEARCA:SLV)
Tuesday’s test of the 32.90 prior lows extended down Wednesday to test 32.60, but 32.90 was recovered into the close. Back above 32.20 would signal the corrective dip had ended, reversing momentum up.

30-year Treasury
Mar Contract US; (NYSEARCA:TLT)
The bounce off of Monday’s test of the 149-04 target extended higher Wednesday to fresh highs at 150-21. The 150-14 prior highs held as resistance, and now back under 150-02 would signal momentum reversing down to at least test the 149-18 sell signal.

Crude Oil
Jan Contract CL; (NYSEARCA:USO)
With the next trending attempt likely to extend, Wednesday’s opening dip held Tuesday’s low to avoid attempting to trend. At least an obligatory dip to 86.50 is growing likelier.

Natural Gas
Tuesday’s gap down, which only ranged around Friday’s prior low, had required no follow-through so long as a recovery were underway immediately Wednesday. The gap up to Tuesday’s 3.59 high extended sharply higher to probe 3.70. A second consecutive higher close would confirm the reversal, next targeting 3.90.

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.
No positions in stocks mentioned.

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