Natural gas markets initially tried to rally towards the $2.80 level during the week but found enough resistance in that area to go lower, forming a negative looking candle. However, at the end of the day we are still within overall consolidation.
The natural gas markets initially tried to rally during the week but found the $2.80 level to be far too resistant to continue going higher. In fact, we felt to the $2.70 level by the time we started to close out the Friday session, showing that we are very well entrenched in this consolidation area that we have been in for months. I believe that the market continues to respect these levels, so longer-term traders probably won’t be as interested in this market and short-term traders would be, taking advantage of some type of range bound system.
If we do break above the $2.80 level, then the market probably goes to the $3 level after that. If the market does that, it would only be a week or two possibly. Looking at this chart, I think it’s easier to trade from the shorter-term perspective, as the profits will be much more sustainable. Longer-term though, I believe we continue to see a lot of selling pressure, based upon a significant amount of oversupply and that should continue to be one of the major problems. Beyond that, warmer temperatures in the United States will continue to be a major problem, and I think that overall, it’s easier to sell rallies as they appear. If we did breakdown below the $2.60 level, the market probably goes down to the $2.50 level. That’s an area that is massive support and a breakdown below there would be a major of that, sending a fresh new wave of sellers into the market.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.