Natural Gas Forecast October 30, 2014, Technical Analysis

The natural gas markets initially fell during the session on Wednesday, testing the $3.70 level for support. We did find it there, and as a result the market turned back around and formed a nice-looking hammer. The hammer sits just below the $3.80 level, and suggests that the market is in fact going to go a bit higher from here and perhaps test to see whether or not there is resistance above. Because of that, the market looks as if it will more than likely testing the $3.90 level, which is where we anticipate to see a massive amount of resistance reenter the marketplace and push the prices of natural gas back down.

Any type of resistant candle in that area is more than going to be an excellent selling opportunity and a market that is without a doubt overly bearish. If you look above the $3.90 level, there was a massive rectangle where the market had been bouncing around for quite a significant amount of time. Because of that, we feel that the market is going to continue to see plenty of bearish pressure overall.

It would take a massive amount of bullish momentum in order to break above the top of this rectangle. There is so much noise that the market almost undoubtedly is waiting for this bounce in order to start selling yet again. Also, when you think of it there are plenty of reasons to believe that the natural gas markets will remain soft for an extended amount of time.

There is more than enough natural gas in the ground throughout North America to keep the value of natural gas down for a very long time. Quite frankly, natural gas is so abundant in some parts of North America that they simply burn it off at petroleum drilling sites as it is often a byproduct of oil exploration and drilling. Also, the northeastern part of the United States continues to be warmer than usual, and that of course can bring down the value of natural gas as demand decreases.