By FXEmpire.com
The natural gas markets fell yet again for the week as the $2 level has finally given way. The bears are in firm control of this market, and as a result we simply cannot buy natural gas under any circumstance. The trend has been relentless, and as a result it is hard to think that it will change anytime soon.
The market has lain to waste many accounts of traders that look at the chart and think that “It can’t keep falling like this”. We would be quick to suggest that the buying of this contract could lead to destruction of your account as there are so many different reasons to sell natural gas.
The supply and demand equation is by far the biggest problem with the idea of higher prices as there are well over 14 trillion cubic feet of known natural gas deposits in the United States alone. This doesn’t include the Canadian fields as well, and the drillers are finding more natural gas deposits on an almost daily basis as the technology to extract it becomes more and more efficient.
The $2 level should act as resistance, but even if it doesn’t – we are still selling the market overall. After all, the $2.20, $2.40, $2.50, $2.60, $2.80, and $3 levels are all possible places where the sellers could step back into the markets and push prices lower. The $3 level would have to be broken to the upside on a weekly close in order to consider the possibility of buying. Still, even with this, we would more than likely be looking at a pullback for the sellers, not a trend change.
The markets should continue to fall, but will be susceptible to sideways grinding from time to time. There are many analysts on Wall Street that are calling for $1 natural gas, and the way this market has fallen, it would be hard to say that it’s an impossibility. In fact, we are now even seeing some calls for $0.75! Because of this, we sell new lows and rallies. It has worked well for months, and there is nothing to suggest that it is going to be any different going forward.
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Originally posted here
