Natural gas markets fell a bit during the trading session on Friday, reaching down towards the $2.68 level for support. That’s an area that was supportive on Thursday as well, so we have a proclivity to respect this area. However, if we can break down below the $2.68 level, the market could then go down to the $2.60 level. Any rally at this point will have to respect the fact that we have so much in the way of negativity, so I think it’s only a matter of time before sellers come back in. The $2.80 level above is the top of the consolidation area, but I think that selling at that level would be the best route to take, if you get the opportunity. The $2.60 level underneath continues to be massive support, and I think that it will be difficult to break down through there. In other words, I think it’s easier to short this market on signs of exhaustion after short-term rallies than anything else. Think of it as “value” in the US dollar offering itself. If we did breakdown below the $2.60 level, it’s likely that the market will probably try to go down to the $2.50 level.
Market participants continue to be very erratic, but with a warmer temperatures in the United States coming, it makes sense that the demand for natural gas will start to fall off again. Ultimately, I have no interest in buying this market anytime soon, and even if we did break above the $2.80 level, it’s going to be a short-term momentum trade that will turn around again.