Natural Gas forecast for the week of December 25, 2017, Technical Analysis

The natural gas markets were very volatile during the week, selling on a neutral candle. The neutral candle is looking very likely to form as a shooting star, and it sits on top of major support. This emphasizes how important the $2.50 level is, and I suspect that if we break down below there, the market will probably break down from there and reach towards the 100% Fibonacci retracement level. That would be a catastrophic move down towards the $1.63 level. On the other hand, if we can break above the top of the shooting star, we will challenge the $2.85 level, and a break above there sends a market to the $3.10 level.

I believe that rallies will continue to offer selling opportunities in general, and I think that longer-term traders cannot buy natural gas as there seems to be no appetite for the commodity, as this is the time of year where you should typically see bullish pressure. If we were to rally, it would be absolutely brutal and very difficult to handle. I think that at this point the natural gas markets are very much like the gold markets in the 1980s, simply a “sell the rallies” type of situation. The oversupply of natural gas continues to be a major issue, as the Americans alone have over 300 years’ worth of proven supply. The demand simply cannot keep up with the supply that we find ourselves pumping out. Anytime there’s a rally, American fracking companies are more than willing to throw more supply into the marketplace.

NATGAS Video 25.12.17