Natural gas markets drifted lower again during the trading session on Tuesday, as traders came back from the Martin Luther King Jr. holiday. The $3 level underneath offers a significant level, but I think of that we are starting to see the market roll over yet again.
Natural gas markets rolled over a bit during the day on Tuesday, reaching down towards the $3.05 level. I think that there are massive amounts of support at the $3 handle, but we have sliced through that area several times, so I don’t think it’s good to be a monumental thing if we do again. Rallies at this point in time will have to deal with the gap above that is centered around the $3.20 level, and I think that every time we rally from here and show signs of exhaustion, I’m willing to start shorting. While this is historically a positive time of year for the natural gas markets, and although we have gotten a bit of a bump occasionally, the markets have struggled a bit due to a massive oversupply, which I think is a longer-term issue.
If we break down below the $3.00 level, the market is likely to go down to the $2.85 level over the next several days, and at this point I just don’t see a significant opportunity to go long, as there is so much in the way of negativity and because of this I think that we are looking for rallies as opportunities to take advantage of a longer-term downtrend. I do recognize that the $2.75 underneath is massively supportive though, so I think we continue the overall grind sideways, selling when we can, and stepping aside when the markets bounce. In fact, I don’t even have a scenario in which I’m willing to buy.
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.