Natural Gas forecast for the week of December 3, 2012, Technical Analysis

The natural gas markets fell precipitously during the previous week as we saw the $4.00 level offer far too much resistance in order for the buyers to overcome. A larger than expected inventory number around the United States certainly did not help, and the fact that we are getting warmer weather forecast for the northeastern part of the US adds to the bearishness.

Looking forward, we see a move below the 3.50 level as breaking the downtrend line that had initially kept the market lower and it is in theory going to keep it higher now. Because of this, we think that this next week will be vital and that longer-term traders need to wait and see what type of the candle we get. If we get a supportive candle at 3.50, we would be more than willing to start buying again, however if we close significantly below it, we think that lower natural gas prices will follow.