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Natural Gas Forecast December 2, 2015, Technical Analysis

By:
Christopher Lewis
Updated: Dec 2, 2015, 06:19 UTC

The natural gas markets initially tried to rally on Tuesday, but as we have seen several times previously, we could not hang onto the gains. The resulting

Natural Gas Forecast December 2, 2015, Technical Analysis

The natural gas markets initially tried to rally on Tuesday, but as we have seen several times previously, we could not hang onto the gains. The resulting candle is very negative looking as it is a shooting star, and it does suggest that it’s time to start selling yet again. Given enough time, we believe that we will reach the $2.00 level, and with that being the case we have no interest in buying. In fact, this is the type of market that we love to trade, as we like the idea of a “one-way market”, as it tells us exactly what to do and when to do it. We sell on a break down, and of course we sell on rallies. In fact, we see so much resistance above that we don’t even have a theoretical scenario at this point where we would start to buy this market.

Given enough time, we do recognize that any rally will run into trouble not only because of the bearish weight of the downtrend, but the fact that we simply have a serious lack of demand for natural gas in relation to the massive amount of supply that’s out there currently. We believe that this market will run into trouble every time we rise because of this, and of course the fact that the US dollar is strengthening. Remember, the commodity is priced in US dollars, so it makes sense that we will have to use less of those US dollars in order to buy natural gas as the currency increases in value.

The supply has drastically exploded to the upside over the last several years, and you can see that natural gas is very much like the gold market back in the 1980s: every time it rallies, it’s time to start selling as the market is so heavily moved in one direction. The fact that we continue to find more and more natural gas deposits in America and Canada should continue to put quite a bit of pressure on this market over the longer term.

 

Natural Gas Forecast December 2, 2015, Technical Analysis
Natural Gas Forecast December 2, 2015, Technical Analysis

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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