Natural Gas Price Forecast – natural gas markets attempt to break out

Natural gas markets attempted to rally during the trading session on Monday, slamming into the $2.75 level. However, as we are in a massive downtrend it is only going to be met with selling pressure.
Christopher Lewis
Natural gas daily chart, February 12, 2016

Natural gas markets tried to rally during the trading session on Monday but found enough resistance at the $2.75 level to turn around and fall significantly. However, I think that we will eventually break out to the upside simply because we are so oversold. It’s not necessarily that I want to own natural gas, but I think that the relief rally is basically needed at this point, because we have been so sold off as of late. I think at this point it’s very likely that we will continue to see a bearish pressure on natural gas, but the bounce back makes quite a bit of sense, because the $2.50 level underneath is massive support.

If we were to break down below that level, it would be extraordinarily negative for this market. I don’t think that’s going to happen though, and I believe that it’s only a matter of time before we get some type of massive short covering rally. All it would take is a major cold snap in the right place in the world to drive demand through the roof in a very short amount of time. That being said, it would be short-lived, and as we are escaping the winter months in the United States, that will drive down a lot of demand. Beyond that, we have a lot of concerns about global demand, mainly because we have a potential slowing down of economic activity. That of course will drive down the need for energy consumption. I am bearish, but I would rather see a rally that I can sell from higher levels.

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