Natural gas markets gapped higher at the open on Monday, and then bounced significantly towards the $2.93 level. This is an area that had previously been supportive, so I would expect to see sellers come back into the market relatively soon. I also believe that the $3 level above is massive resistance, and that we will eventually break down in the face of that type of selling pressure. I believe that the market will reach towards the $2.85 level given enough time, and more importantly: breakdown below there and start aiming towards the $2.75 level after that.
Choppiness with negative pressure
I believe that we will continue to have negative pressure due to the oversupply of natural gas in the world, and of course the lack of demand that we have seen as well. Energy producers are starting to switch to coal in the United States again, as it is even cheaper the natural gas. With the United States flooding the markets worldwide, it’s difficult to imagine that natural gas is going to suddenly picked up value. However, this market does tend to focus on the short-term quite often, perhaps because it is a fairly thin market in general. Ultimately, I believe that the easiest way to trade this market is the simply sell every time he gets ahead of itself, which is quite often. I believe that longer-term we are going to go looking for the $2.50 level, although it will take quite a bit of time to get down there as the markets get weekly inventory numbers, and of course there is a lot of volatility in the crude oil markets that have a bit of a spillover effect into the natural gas markets occasionally, and quite suddenly often.
NATGAS Video 11.7.17
This article was originally posted on FX Empire