Natural gas markets rallied significantly during the week, reaching towards the $2.80 level, an area that the market has rolled over from more than once. When you look at the weekly chart, you can see several failures at that area, and there’s likely going to be a bit of a push back there. However, if we break above the $2.82 level, the market could continue to go higher. Otherwise, if we roll over from here I think that the sellers could easily push this market back to the $2.70 level. As far as the longer-term trader is concerned, there’s more room to the upside right now than down, so a breakout could have longer-term traders looking towards the $3.00 level above.
This is a market that is much easier to trade from a short-term standpoint, as the range has been very well defined. Even if you are a longer-term trader, you will need to look to short-term charts for entry points and take advantage of them as they occur. I believe that the market will eventually make a decision, but right now I think it’s easier to scout this market from a daily standpoint than it is to invest. If we were to break down below the $2.78 level, based upon short-term charts it’s likely that we would fall to the $2.70 level underneath. Currently, I think this is a bit of a “50-50” opportunity.