By FXEmpire.com
The natural gas markets had a fairly quiet day on Friday as the market hovered right around the $2.80 level. The action for the day was fairly unconvincing in either direction, and as such there really isn’t much to be signal from this move. The Wednesday shooting star is the argument for going short of this market, the reality is that there is a lot of choppiness right around the $2.70 level. Because of this, the more conservative trader may choose to wait until a break of the lows for the Thursday session in order to short this market.
As for buying, the supply demand equation is so far out of kilter at the moment that it is hard to see this market rising with any serious gusto. We are entering hurricane season however, that sometimes can boost natural gas prices because of refineries closing down, but beyond that it’s really hard to imagine a situation where gas suddenly become very expensive.
As long as we are under three dollars, we are not willing to buy this market because of the massive downtrend that we’ve seen over the last couple of years. At this moment in time, it appears that once we break through the $2.70 level that the support should give way. In fact, if we get that move you think that the $2.20 level at the bottom could be targeted by the bears. The longer-term trend is down so of course we feel that selling is the right way to go. We firmly believe that the natural gas markets have much further to go to the downside, as the supply is simply far too great for the demand.
However, there’s always the alternate argument and we feel that it is plain to see the $3.00 level is going to be resistive. We feel that this resistance based upon earlier clusters goes up to about $3.20 and it is there that we would consider buying if we get a daily close that high. Nonetheless, it appears that it might be a while before we see something like that.
Click here to read Natural Gas Technical Analysis.
Originally posted here
