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Christopher Lewis
Natural gas daily chart, September 21, 2018

Natural gas markets went back and forth during trading initially on Thursday, but as the report came out a little bit bearish, the market broke down through the $2.90 level, only to turn around and see massive buying. Looking at the chart, it’s obvious that the $2.90 level is important, and now that we have turned around to form a long tailed hourly candle, I believe that if we can break down below that tale, then the market will unwind to the $2.85 level. Longer-term, we have been consolidating for some time between the $2.95 level and the $2.75 level, with $0.05 worth of width after that. Ultimately, this is a market that is going to be contained within the longer-term range, and quite frankly we had gotten a bit ahead of ourselves. However, it looks like the buyers are quite ready to give up so it’s very likely that we will see tenacity. While I believe there will be a selling opportunity rather soon, it may be closer to the $2.95 level.

It’s not that I can’t see a scenario where I would buy natural gas, it’s just that we are way to elevated at this point to do so as it would be chasing the trade and I think the risk to reward ratio isn’t quite there to make taking that side of the phrase very palatable. All things being equal, I think that if you are a buyer you need to be looking for value more than anything else. This time of year does tend to be bullish though.

NATGAS Video 21.09.18

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