Natural Gas Price Forecast – natural gas volatile and negative on TuesdayNatural gas markets initially tried to rally during the day on Tuesday, reaching towards the $2.78 level, an area that has been supported in the past, so it’s not a huge surprise that its resistance now. I believe that natural gas markets are ready to extend the lower levels.
Natural gas markets were volatile during the trading session on Tuesday, reaching towards the $2.78 level, an area that has offered support recently. The fact that the market rolled over there is not a huge surprise, mainly because we have such a huge oversupply of natural gas out there, and of course the rising US dollar puts downward pressure on most commodities anyway. The $2.74 level has been short-term support, but I don’t see anything major there to keep the market afloat. It makes more sense that we go down to the $2.70 level, and then test that major support level.
A break down below that area would allow the market to reach towards the bottom of the overall consolidation area, which I see as the $2.60 level as it was the bottom of the longer-term trading range that the market has been in. If we were to turn around and break below the $2.60 level, that would be a catastrophic event for the natural gas markets. I don’t anticipate that happening, but I do expect that the market will go down to that area to test that level, because it is simply far too interesting of a target. I believe that rallies at this point are to be sold and have no interest in buying this market anytime soon as it is showing its longer-term proclivity to drift lower. Look for exhaustion, then get involved in this trend.