Natural gas markets initially shot higher during the trading session on Tuesday again, but ran into enough resistance near the $2.82 level to roll over. By rolling over, we ended up forming a relatively negative candle for the session, suggesting that perhaps we are starting to get a little bit ahead of ourselves. I believe that this market will eventually roll over but believe there’s even more resistance closer to the $3.00 level above that you should be worried about. Because of this, I like the idea of shorting this market closer to that level, but if we were to break down below the $2.75 level, at that point I would feel comfortable selling as well. I anticipate this market being very noisy, but that’s nothing new for natural gas, which is a bit of a thin market anyway.
Longer-term, I believe that the oversupply of course will outweigh any bullish pressure, and that bullish pressure is a short-term phenomenon more than anything else. In general, this is a market that I think continues to see a lot of issues, as higher prices will attract a lot of attention from suppliers in the United States who are more than willing to drill even further. Expect noise, but if you are a longer-term trader you should be waiting for signs of exhaustion or breakdowns to start shorting again.
NATGAS Video 14.03.18
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