Natural Gas Markets Continue to Drop

Natural gas markets have initially tried to rally during the trading session on Friday, but then showed signs of exhaustion. At this point, it looks as if the market is going to continue to struggle in general, which makes a certain amount of sense considering that the storms in the northeastern part of the United States are over, and we are setting up for a move into the spring. Because of this, natural gas demand should continue to be soft at best. The candlestick is a bit of an inverted hammer, so if we break above the top of that we could go higher to try and fill the gap above.

NATGAS Video 14.02.22

Any rally at this point in time the show signs of exhaustion I will be a seller of, just as a break down below the lows of the session on Friday is also a selling opportunity as well. I think we will go looking towards the $3.50 level underneath where we had seen a significant amount of support. I will not buy natural gas this time year, because this is generally when it really starts to take a beating due to a lack of demand.

If we do break down below the $3.50 level, that then opens up the possibility of a move down to the $3.00 level, which is a large, round, psychologically significant figure, and of course is the “measured move” of the descending triangle that I have marked on the chart. All things been equal, I do think we go lower over the next several weeks, but if you get the opportunity to sell from a higher level, that obviously a major benefit.

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