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Christopher Lewis
Natural Gas

Natural gas markets initially fell during the trading session on Wednesday but have turned around to form a little bit of a supportive looking hammer, as the market is still trying to fill the gap from before. By doing so, it would perhaps run into a bit of resistance, but the one thing that I am noticing at the moment is that the 200 day EMA is sitting right here where we are. To the upside, even if we break above the gap, I think that the 50 day EMA will continue to be an issue at the $2.69 level, so I would be a seller up there as well.

NATGAS Video 31.12.20

All things being equal, the market is likely to see a little bit of a boost from here, but I think at the end of the day we are looking at a warmer than anticipated winter, and that is absolutely crushing the value of natural gas. I had previously looked for “one last hurrah” for natural gas heading into the spring contracts, but we have failed to live up to that each and every time it look like we were about to rally. At this point, I think it just simply easier to short this market after rallies that show signs of exhaustion.

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To the downside, we could be looking at a move down towards the $2.00 level, which is a large, round, psychologically significant figure and an area that has been important more than once. All things being equal, this is a market that is oversupplied, and we are going to start focusing on that sooner rather than later.

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