Natural Gas (NG1!) Technical Analysis
The natural gas market has fallen apart during the trading session on Monday as we continue to see a lot of noisy behavior. The market breaking below the $3 level, of course, is a pretty significant deal, but by breaking through there, it could open up the possibility of a drop down to the $2.80 level. The $2.80 level has been very important as support, so we will see whether or not that plays out. All things being equal, this is a market that, given enough time, will continue to see a lot of choppiness.
Geopolitical Rumors and Seasonal Demand Shifts
I think part of what we are seeing is a situation where the markets are reacting to the fact that Trump claims that there have been talks between the US and Iran. The idea is that perhaps it will free up some of the transport of natural gas around the world. You also have to keep in mind that this time of year has very low demand, which is starting to drop even further, so I remain bearish on natural gas at this point and for the next several months.
I would prefer to see a little bit of a short-term rally so that I can fade off signs of exhaustion. I don’t have any proclivity to buy this market without a major change in attitude, but I also look at the $3.50 level as a bit of a ceiling. So, with that being the case, I’m looking for the bounce and then the long candlestick wick to the upside to start shorting.
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