Natural Gas forecast for the week of August 7, 2017, Technical Analysis

Natural gas markets fell significantly during the week, slicing through the $2.85 level underneath, reaching towards the $2.75 level as well. I think the $2.75 level should offer a bit of support, and we could get a short-term bounce. However, I believe that it’s only a matter of time before breakdown below there and then go towards the $2.50 level. When I look at the weekly chart, this could be a massive head and shoulders, which would be catastrophic for this market if we break down below the $2.50 level. I think at this point, the $2.50 level makes for a nice target, but I don’t think it will be broken that easily. With this being the case, I continue to follow the same trading strategy as I have previously.

Selling rallies

Looking at the markets, I believe that we continue to sell rallies, and short-term traders certainly have been following this attitude. The $2.85 level above should be resistive, and I think the $3 level most certainly is. It is not until we break above the $3.10 level that I would consider buying this market, and quite frankly I just don’t see that happening. Natural gas continues to be oversupplied, just as it has been for ages. The US dollar is also starting to strengthen a bit after a stronger than anticipated jobs number, so I think that the attitude of the market is going to remain bearish going forward, and therefore selling is the only thing that makes sense longer-term, and short-term as well. Anytime we get a rally, that is an opportunity to take advantage of a longer-term trend as we should continue to see momentum to the downside. I believe that the market will continue to focus on the oversupply more than anything else.

NATGAS Video 07.8.17