Natural gas markets bounced from the $2.68 level, showing signs of strength during trading on Monday. It’s likely that we should continue to see a lot of resistance in this general vicinity, but most certainly closer to the $2.80 level, perhaps even the $3 level. I think it’s only a matter of time before the sellers get involved in sell signs of exhaustion. I believe that every time this market rallies, it should offer an opportunity. I think that if you are patient enough, you should see some type of exhaustion that you can take advantage of. I have a hard time believing that this market is going to be able to sustain some type of longer-term move, and I think that the market will continue to deal with a lot of oversupply, and of course a strengthening US dollar will eventually put some bearish pressure on this market. However, as we get these short-term pops like we have seen on Monday, that should get you ready to start looking for shorting.
On the hourly chart, we have formed a “triple bottom” near the $2.68 level, so I think it will offer support the next time we get close to it. However, I like the idea of shorting and aiming for at least that level, if not a breakdown to the $2.60 level which is much more significant on longer-term charts. If we did break above the $2.82 level, then I think short-term momentum traders can jump into this market, but that seems the least likely of scenarios.