Natural Gas Technical Analysis
Natural gas is trying to rally a bit during the trading session here on Thursday as we are trying to bounce from the $2.75 level. All things being equal, this is a market that I think continues to see a lot of noisy behavior and it would not surprise me at all to see a bit of a short-term rally, maybe short covering or possibly just the usual noise of this market. After all, natural gas is one of the noisier contracts that I follow and of course is driven by a whole host of influences that most retail traders don’t have access to.
Nonetheless, this is also a market that when I look at, I can see it is clearly in a downtrend. I don’t see that changing in the short term, but I do recognize that if we get the opportunity here, we should be looking at this through the prism of a market that may reach towards the $3 level. And if we can get beyond that $3 level, maybe $3.20. I don’t necessarily think that I should go long. What I’m looking for is a rally that then shows signs of exhaustion. That exhaustion candle will be my entry to start selling again, hopefully near the $3 level.
This is the wrong time of year for natural gas to be doing well unless there’s a heat wave. And right now, there’s no heat wave in the United States. Clearly there’s no heating demand. So with all of that being said, I think you’ve got a situation where traders continue to fade rallies at least for the next couple of months, but eventually we will start fading into the winter months and start pricing natural gas to the upside. Right now, though, we are nowhere near that.
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