By FXEmpire.com
Natural gas markets got quite a bump during the week as the bulls drove prices up to the $3 level. Looking at the weekly charts, we can see that the $3.00 level is an area that is obvious resistance, and the fact that it pushed back against the buyers this week was really no surprise. The supply and demand equation in this market is simply far skewed to the supply level. With this in mind, it can be very difficult for natural gas to get any serious traction going forward.
As the $3.00 level is such an obvious spot for resistance, we can’t help but notice that there is a shooting star on the weekly chart that touches just below that level. This is a classic testing of resistance and failure, and as such a breaking of the bottom this previous week’s range would be a massively bearish signal in an already massively bearish market.
True, there’s been a lot of talk lately about how natural gas may be coming around, but it’s plain to see in this chart that it’s got a long way to go for that to be true. We still assume that the trend is down, and will until we clear the three dollar and 27 levels or so as it would show a serious shift in momentum. Until leveling time, we only sell this market and the shooting star is a perfect set up for doing just that. Once the level on the bottom gives way we feel that the $2.27 level which is essentially the bottom of the consolidation area will be tested again. Once we get through that to $2.00 is almost an assured target. With this in mind, we still think that there is a lot to go in this market to the downside. True, there will be times when we get nice bounces like we’ve had over the last couple of weeks but as you can see this is starting to fail already. With this in mind, we plan on being short of natural gas this coming week. Buying on the other hand, could be done above the $3.25 level, but we feel that this is the least likely of outcomes.
Click here to read Natural Gas Technical Analysis.
Originally posted here
