Natural Gas Forecast for the week of December 31, 2012, Technical Analysis

The natural gas markets fell for most of the week over the last five sessions, but bounced enough in order to form a bit of a hammer. However, we also see a shooting star just above at the $3.60 level from three weeks ago, and this suggests more along the lines of consolidation rather than some type of serious bounce.

The longer-term charts most decidedly bearish, and although we have perked up a little bit lately, this is probably more to do with seasonality than anything else. After all, it is wintertime in the northeastern United States, the area that uses the most natural gas on the planet. However, we have seen $4.00 as an area that is strong resistance, and we do not see that changing anytime soon. Although we have a nice hammer for the week, because of the conflicting shooting star from three weeks ago just above we are not willing to take this otherwise bullish signal. In fact, we think a break of the bottom of the hammer would be an excellent selling opportunity.