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Natural Gas Price Forecast – natural gas markets crater on Tuesday

Natural gas markets initially tried to rally during the trading session on Tuesday, but found quite a bit of resistance above to turn around and crash into the bottom of the consolidation triangle that we have been in.
Christopher Lewis
Natural gas daily chart, December 12, 2018

Natural gas markets initially tried to rally during the trading session on Tuesday but found enough resistance at the downside trend line of the symmetrical triangle to turn around and crash into the bottom of it. I think it is only a matter of time before we break down significantly, because this time of year, although bullish, is rather brief. Colder temperatures in the United States of course pressure the natural gas markets to the upside, but that’s a short-lived phenomenon. As soon as futures markets start trading Spring contracts, you start to see sellers jump in and punish the market.

NATGAS Video 12.12.18

Rallies at this point are to be sold, but if we break down below the up trending line that I see on the chart, then we could go down to the four dollars level rather quickly. If we break down below there, then the market probably goes to fill the gap underneath. The gap underneath extends down to the $3.75, and then eventually the $3.25. I would not be surprised at all to see that happen, but in the meantime it’s probably easier to simply fade rallies that show signs of exhaustion. I believe that the $5.00 level above is going to continue to be the “ceiling” of the market, unless of course something fundamentally changes with the supply situation. That being said, this is a market that is highly oversupplied from a longer-term standpoint, and that will continue to be a major issue for natural gas pricing.

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