Natural Gas Forecast October 28, 2014, Technical Analysis

The natural gas markets as you can see gapped lower at the open on Monday, and then tried to fill that very same gap. However, you can see that the market fell back down forming a shooting star. The shooting star sits out the $3.64 level, and with that we believe that the market will then continue down to the $3.50 level given enough time. The natural gas markets are most certainly bearish at this point, there is no denying that. With that, we are sellers on short-term rallies as well as a break down below the bottom of the shooting star. We have no interest in buying this market, and believe that any time we rally, it will simply be a selling opportunity yet again as temperatures in the northeastern United States continues to look like they are going to be relatively warm. With that, it’s almost impossible to imagine natural gas markets going higher for any real length of time.

Looking ahead, we believe that the breakdown below the $3.90 handle of course is a sign that the market is ready to go much lower as we sliced through the bottom of the consolidation rectangle, which had been keeping this market somewhat afloat through most of the summer. With that, we feel that the market is ready to finally continue the downtrend, as we needed to build up enough momentum to finally break down and get the sellers excited yet again.

Even if we rally, we think that the sellers will continue to be in control of this market until we break well above the $4.00 level. There is probably significant resistance all the way to the $4.25 level as well, so with that it’s likely to continue to be a bearish market for the foreseeable future. The $3.50 level should be pretty significant as far as support is concerned, as it is a large, round, psychologically significant number. It is possible that we get down below that level as well, but in the meantime that is our target as the market continues to fall.