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The natural gas markets had a fairly supportive week over the last five sessions as we saw the market bounce in order to form a hammer by the time we closed on Friday. It appears that the $2.60 level has held as support, and as such we remain within the up trending channel that has been a feature of this market since the middle of March.
However, we can make a case for a bearish flag although it does have a little bit of a ridiculous target. Nonetheless, it suggests the same thing to us: that if we break this up trending line that we bounced off of this previous week, the market will continue much, much lower. In fact, it's what were expecting sooner or later. However, we fully understand that the market looks ready to bounce at this point in time. The trend is decidedly bearish in this market though, and as such we are simply going to look for a decent sell signal. Breaking the bottom of this hammer from the previous five sessions would be an excellent sell signal, as would some type of week candle between here and the $3.25 handle.