Natural Gas Technical Analysis
The natural gas market has gapped lower to show signs of weakness as we are rolling over into November, and I think that’s pretty typical, actually, because we’re trying to adjust from the rollover. I do think, though, we are starting to think about cooler weather in the United States. It’s cooler today than it was last week, so we’ll have to see whether or not that continues to create opportunities to take advantage of cheap gas.
Support Below
I do think that somewhere near the $3 level, there should be significant support. It was the previous consolidation area. Now, ultimately, if we were to drop from there and bounce from the $3 level, then it opens up the possibility of a turnaround and seeing this market go looking towards the $3.40 level.
The November contract is where we start to see traders pay a little bit more attention to demand coming out of the United States, and, of course, this winter, we also have to wonder whether or not the Europeans are going to have to be importing a ton of U.S. gas. That could be a big deal as well.
With all of that being said, I am bullish on natural gas, but slightly so as we roll into November. I have no interest in shorting this market, at least not anytime soon, and therefore I am looking for some type of drop and bounce. That opens up the possibility of getting involved to the upside.
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