Natural gas markets have rallied significantly during the trading session on Wednesday, as we have now cleared above the $2.90 level. I think that there is more than enough support underneath to keep this market going forward and to the upside, at least in the short term. I believe that the $3.00 level is massive in its resistance, so I don’t think that we break above there easily. Overall, I believe that the market continues to see a lot of volatility, but most certainly more so to the upside than anything else.
If we break down below the $2.85 level, then I think we unwind to the $2.80 level. A break down below there unwinds the market towards the bottom of the overall up trending channel, but right now that seems very unlikely to happen. I believe that buying on the dips continues to be the best way to play this market, at least in the short term. I’m waiting for a longer-term exhausted daily candle the start shorting. Obviously we don’t have that quite yet, so in the meantime I think that the short-term bias must be positive, as natural gas usage seems to be picking up. Expect a lot of choppiness, but overall I would anticipate that value hunters will continue to return to this market, especially in the CFD and the futures markets. Ultimately, I believe that the $3.00 level is far to juicy of a target for traders to ignore.