Natural gas markets initially fell during the week but found enough support at $2.80 level to turn around and show signs of strength. In fact, we rallied quite vigorously and towards the $3.00 level. This is an area that’s very likely to offer a lot of resistance though, so I expect that at the very least we will see a short-term pullback. I think that the three dollars level will bring a lot of selling pressure into the market, but the question then remains whether we can break above there eventually? I think it’s likely that we could, based upon the momentum that we have seen. However, in the short term I think that it would be foolish to think that we will slice through the $3.00 level without some type of reaction. If we form an exhaustive candle, then we could start selling as it would be the beginning of a resumption of the consolidation. However, I think we could go as high as the $3.10 level above, which should continue to offer resistance as well. In the short term, it looks very bullish, but we could see some type of blowback rather soon.
If we do fall, I think that the $2.80 level underneath should be supportive but breaking above the up-trending channel of course is yet another reason to think that this market will continue to find buyers. We are getting towards the warmer months of the summer in the United States, so that could also add to the up-trending momentum.