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Christopher Lewis

Natural gas markets have rallied a bit during the trading session on Friday, perhaps in a bit of short covering as we had broken through a major support level. Quite often, you will see “market memory” come into play, and therefore it’s likely that the previous support should act as resistance. That being said, natural gas markets are extraordinarily soft right now and it’s very likely that we will continue to see a lot of issues out there that will continue to keep natural gas on soft footing, but quite frankly we are at extraordinarily low levels.

NATGAS Video 06.04.20

To the upside, if we can break above the $1.60 level then I start to look to every $0.10 as a potential selling opportunity. Natural gas markets do tend to move in $0.10 increments, with a little heavier emphasis on $0.20 increments. The 50 day EMA is currently sitting just above the $1.80 level and could also offer quite a bit of resistance. Even if we were to break through there, the $2.00 level above would offer significant resistance as well and could be a trend defining moment. I highly doubt that we are getting there anytime soon, simply because the oversupply of natural gas is worse than ever, and we not only have far too much supply out there and far too many suppliers, but now we have the coronavirus stopping the world’s economy driving demand down further than usual. Warmer temperatures coming in the next few weeks of course are yet another reason to be very negative natural gas. At this point my trade plan is simple: I am waiting for a bounce that I could sell into.

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