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Natural Gas Forecast October 25, 2016, Technical Analysis

By:
Christopher Lewis
Updated: Oct 25, 2016, 05:37 UTC

The natural gas markets broke down again during the course of the day on Monday, slicing through fairly significant support for yet another session.

Natural gas daily chart, October 25, 2016

The natural gas markets broke down again during the course of the day on Monday, slicing through fairly significant support for yet another session. Because of this, I believe that the market is eventually going to continue to go much lower, and I feel that we are now starting to trying to assert a downtrend again. We have broken below the 50-day exponential moving average which of course is pictured on the chart with the blue line, but we also have broken below the $3 level which is obviously a large, round, psychologically significant number. Beyond that, we have broken down below the uptrend line as well. In other words, we have most certainly seen a complete reversal of fortune for the natural gas markets, and I believe at this point in time we are starting to see the longer-term concerns come back into the marketplace.

Rallies at this point in time will have to deal with not only the previous uptrend line, but also the $3.00 level above. With this, any type of short-term exhaustive candles should continue to offer selling opportunities as we continue to see quite a bit of downward pressure. Alternately, we could break down below the bottom of the candle for the day on Monday, and that should continue to go much lower and reach down towards the $2.65 level below. I would also suggest that breaking down below the $2.85 level is breaking certain support also, so this would only add more confidence in the downtrend at that point.

Remember, the United States has 300 years’ worth of natural gas in the ground that it knows of. In other words, there’s never going to actually be a shortage of natural gas, at least not beyond storage tanks. After all, the massive amount of natural gas in the United States is astounding, but that doesn’t even include Canada, which is suspected of having a very similar amount itself. Natural gas could very well be one of those markets where you simply sell every time it rallies, much like gold markets did in the longer-term perspective back in the 1980s.

Natural Gas Fundamental Forecast

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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