Natural Gas Forecast December 14, 2012, Technical Analysis

The natural gas markets tried to rally initially during the Thursday session, but as you can see we fell down to the $3.326 level by the end of the session. We closed at the very lows of the candle, and this of course always signals that more bearishness is very likely. We see this area around the $3.30 level as being crucial for support as far as is market is concerned, and as such, a move below the $3.30 level that is sustained for any significant length of time is enough to get us to start selling.

At that point time, we think that the $3.00 level will be attempted and very likely hit. That begins a gap that sell this market shoot straight up for a move of roughly $1.00. With this being said, that gap has never been filled, and we just broke through the $3.40level, a significantly bearish sign. Because of this, we are willing to start shorting this market at the $3.25 level or any close on a one hour or above chart below the $3.30 level.

The winter has been fairly mild in the northeastern part of United States oh far, and this is bad news for buyers of natural gas markets. This is because the northeastern part of United States is by far the largest consumer of natural gas in North America, and because of that it appears that demand just isn’t going to be there.

Adding to the woes of natural gas bulls is the fact that we simply have far too much of it at this point time. In fact, it is so overabundant in the United States that many oil rigs in the Gulf of Mexico simply burn the gas off because it just isn’t worth the hassle of getting it ready for market. In a situation like that, it’s very difficult to think that we will see bullish action anytime soon. With this being said, we are more than willing to not only sell this market, then become aggressive about it as well.