Natural gas markets bounce around to open the weekNatural gas markets continue to show a lot of volatility, bouncing around just above the $2.80 level. Because of this, it looks as if we are trying to break out to the upside for a quick move, but I believe that this is more of a quick trade than an investment.
Natural gas markets went back and forth during the trading session on Monday, bouncing on top of the $2.80 level. On a breakout above the highs during the day on Monday, we should continue to go much higher, perhaps reaching towards a $2.90 level, and then eventually the $3.00 level later. This is a market that continues to be very noisy, and I think that the $2.80 level will offer support. If we were to break down below there, there is a band of support down to the $2.78 level. Ultimately, I do think that the sellers will come back, but it looks likely that in the short term they have stepped to the side.
If we turn around and break down below the $2.78 level, the market drops down to the $2.75 level, possibly even lower than that. Ultimately, I think that the market is bearish due to a major oversupply longer-term, but it looks as if speculators are jumping into push this market to the upside. Ultimately, this is a market that tends to be very erratic and focuses on the short term only, so keep that in mind. I would be stunned if this market managed to break above the $3.00 level during the summer. Otherwise, I’m looking for a selling opportunity for a larger position, but I think you could take a small position on a breakout, if nothing else just to take advantage of the volatility that is part of this market.