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Natgas Soars to new Multi-year Highs

David Becker
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The cold snap that has covered most of the mid-west and north east has made its way south covering areas as far of Florida which experienced snow for the first time in that past decade. Cold weather from Canada has made its way down creating a ridge through pattern that has kept the cold from escaping. The short term forecast calls for a brief respite, but the likely return will keep natural gas prices buoyed above the 5 dollar per MMBTU level.

Natural gas prices have are in abundance in the US, but the bottlenecks in the pipeline system have generated disruptions and generated spikes were prices have hit $100 per MMBTU.
The technical picture for natural gas is robust. Prices broke out above resistance levels seen near the highs made in May of 2013 near $4.60. Prices are consolidation in a large range above support now seen near the 10-day moving average near 4.70.

Momentum on the February natural gas contract is strong with the MACD (moving average convergence divergence) index printing at its highest levels in the past year. The MACD generated a buy signal last week were the spread (the 12-day moving aveage minus the 26-day moving average) crossed above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.

The relative strength index (RSI) which is an oscillator that measures momentum as well as overbought and oversold levels moved higher with price action reflecting accelerating momentum while printing near 67 which is on the upper end of the neutral range.

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