Natural Gas Weekly Price Forecast – natural gas market forms a hammerNatural gas fell during most of the week but bounced enough off of the $2.70 level to form a hammer, which of course is a bullish sign. This is an area that I have marked as the beginning of significant support extending down to the $2.60 level. I think at this point, we could bounce him here but I also recognize that there is still plenty of selling pressure above.
If you want to trade natural gas from a longer-term standpoint, the first thing I would tell you is stick to the CFD market. Quite frankly, the futures market gets to be a bit expensive, unless you have the appropriate trade size. As you can see, I have four lines on the chart, with roughly $0.30 being in the middle. This is the “battlefield” if you will, and the last $0.10 on both ends shows the “zone” of both support and resistance. This hammer tells me that we are going to stay within the overall norm of the consolidation area, so I anticipate a short-term burst higher. Longer-term, I think we still have far too much in the way of resistance to go higher for a significant run, so if you are a longer-term trader you can probably go back and forth over the course of several weeks in this market.
There’s far too much in the way of supply out there to see this market explode higher, and even if it did it will be a limited run. There’s obviously a ton of supply at the $3.50 level beyond the area I’m talking about, so that would be the absolute “ceiling” of the acceptable trading range. The $2.60 level has been massive demand recently, and as a result I think that will continue to be the case. Look for back and forth systems, perhaps changing direction every few weeks.