The natural gas markets fell during the week at the open, but then spent the rest of the week trying to fill the gap. We did in fact do so, and we ended up forming a green candle, although just barely. The $3 level above continues to offer a significant amount of support, so I believe that it is only a matter of time before the buyers get involved and test the $3 handle again. However, I recognize that there is a significant amount of resistance at the $3 level, that extends to the $3.10 level. Because of this, I am a bit hesitant to buy, but I am more than willing to sell rallies.
Breakdown
The alternate scenario of course is that we simply breakdown. If we can get below the $2.85 level, I am willing to sell natural gas as it should then go to the $2.75 level, and then eventually the $2.50 level. I believe that longer-term, the natural gas markets will continue to roll over as we have a massive oversupply of the commodity going on. Most of the bullish pressure that was fell over the week was due to the “less bad” built in inventory in America. That is hardly a reason for a rally, so therefore I think that the market is susceptible to bearish pressure yet again. Longer-term, I believe that the sellers will continue to flex their muscles, and run where the market goes next. With this, I simply wait for selling opportunities at higher levels, or follow momentum to the downside as it appears. I have no interest in buying, and if we broke above the $3.10 level, I feel that there is even more resistance at the $3.25 level.
NATGAS Video 31.7.17
This article was originally posted on FX Empire