Advertisement
Advertisement

Natural Gas Markets Give Up Gains to Form Ugly Candlestick

By:
Christopher Lewis
Published: Jan 14, 2022, 17:12 UTC

The natural gas markets have initially rally during the week as there is a cold spell coming to the northeastern part of the United States, but quite frankly this is not a big deal as it is a short-term catalyst.

Natural Gas Markets Give Up Gains to Form Ugly Candlestick

In this article:

Natural gas markets initially gapped higher to kick off the week, and then shot towards the bottom of the massive descending triangle that we had previously formed. By doing so, the market is very likely to see plenty of selling pressure, and if we break down below the 50 week EMA, it is very likely that the market goes looking towards the $3.50 level, possibly down to the $3.00 level underneath, as it is the so-called “measured move” of the descending triangle that is sitting above.

NATGAS Video 17.01.22

All things being equal, if we do rally it is likely that we will see plenty of sellers above due to the fact that the natural gas markets have suggested that there are plenty of reasons to see this market drop. Quite frankly, the natural gas markets are oversupplied from a longer-term standpoint, so although it does tend to trade on the short-term weather patterns of the northeastern United States, the reality is that we are already trading the February contract and will soon start to focus on the month of March. That is when temperatures warm up in the US, so thereby it drives down the demand for natural gas going forward.

The only way I would be a buyer of this market is if we were to break above the top of the massive shooting star for the week, something that I just do not see happening anytime soon. All things been equal, this is a market that is a “fade the rallies” situation.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

Did you find this article useful?

Advertisement