Natural Gas Forecast November 9, 2015, Technical Analysis

Natural gas markets initially fell during the course of the day on Friday, but then turned back around to form a nice-looking hammer. The hammer of course suggests that we are going to go higher but we think there is more than enough resistance above to start selling yet again. A supportive candle isn’t reason enough to think that this trend is changing, so having said that we think that any rally at this point in time that show signs of exhaustion is more than likely going to be what we used to start selling yet again. We believe that this market goes down to the $2.00 level, but it will of course take a significant amount of time to get there.

We recognize that the $2.60 level above is massively resistive, because it is previous support. With that being the case, the market will be one that could get a bit of a relief rally at the moment, but we think that the longer-term trend should continue to go much lower. Ultimately, we believe that the market will go back and forth, and quite frankly this is one that’s been sold off rather drastically. Ultimately, markets can never go in one direction forever, so this just simply looks like it is going to be more or less a reason for longer-term sellers to take a break and reload short positions at higher levels.

Adding to the bearishness of this market is the fact that the US dollar continues to strengthen. With that being the case, it should continue the downward pressure on this market anyway. Remember, the commodity markets are priced in US dollars, so it makes sense that the stronger the US dollar, the less it takes to buy this market. Ultimately, you also have to look at the supply and demand part of the quotation as well, which of course is heavily in favor of the sellers as the supply is so heavy when it comes to this marketplace. With that being the case, we have absolutely no scenario in which we serve buying again.