Natural Gas Forecast August 28, 2015, Technical Analysis

Natural gas markets as you can see fell quite a bit during the session on Thursday but found enough support at the $2.65 level to turn things back around and form a bit of a hammer. The hammer of course is a very bullish sign so we feel that a break above the top of the candle, or better yet, above the top of the shooting star from the Wednesday session, would be a nice buying opportunity. We no interest in selling this market now, at least not until we break down below the bottom of the hammer from the session as it would show significant buildup in momentum.

The meantime, we feel that the most likely move will be a break above the top of the candle and a return to the inner parts of the overall consolidation. The consolidation runs all the way to the $2.95 level though, so we could have quite a ways to go. With that, the market could make a countertrend move, as we continue to simply bounce around. It comes down to whether or not you are comfortable going against the longer-term trend, but there could be a potential buying opportunity above the $2.73 handle. There is a lot of noise above though, so quite frankly it would be massively choppy all the way up there.

It is always going to be safer to short this market right now, so a rally that show signs of resistance would be a nice opportunity to start shorting yet again. That’s actually the trade we prefer, but we realize that the bounce from this general vicinity has been relatively reliable lately. If we did break down below the bottom of the candle for the Thursday session, it would show that we are breaking down yet again, as we should then head to the $2.50 level. Ultimately, we think that natural gas will continue to be soft for the foreseeable future, as there has been more and more natural gas found in both the United States and Canada as drilling techniques improve.