Christopher Lewis
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Natural Gas

Natural gas markets have pulled back just a bit during the trading session on Thursday to show more of the “risk off” attitude out there that the markets have been in since the Federal Reserve meeting. That being said, the question now remains whether or not we are still going to try to break out to the upside, or are we finally looking at a top? I suspect that if we can get below the $3.15 level, it is probably time to start selling again, especially if we clear the 50 day EMA as cyclical traders will be looking to short.

NATGAS Video 18.06.21

That being said, if we turn around a break above the $3.25 level then it is almost certain that we will go back to retest the highs, which is an area that should be very difficult to get above, as the $3.40 level has been a major high more than once. Because of this, I like the idea of fading rallies that show signs of exhaustion or perhaps selling that breakdown. If we were to get above the $3.40 level on a daily close, then it suggests to me that we have another $1.00 level to go to the upside, to reach towards the $4.40 level based upon historical charts and of course the measured move of the recent rectangle that we are trying to break out of.

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Nonetheless, this is a market that I think continues to see a lot of noisy behavior, and therefore I think you need to be very cautious about your position size to say the least. Nonetheless, this is a market that I think will continue to attract a lot of inflows in both directions.

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