By FXEmpire.com

The natural gas markets initially rose for the previous five sessions, only to find serious trouble towards the end of the week. The weekly candle is an outside candle, and is also bearish. The shape of it is much like a shooting star, and we have close below the three dollar level. Because of this, we feel that this market looks very heavy at this point in time, and even would suggest that we may be forming some type of consolidative range that runs from just above the $3.00 level, and down to the $2.20 level.

The outlook for natural gas long-term is of course very bearish, as we are in a massive downtrend and there really is nothing suggesting that it should change. It appears that we could perhaps be making another attempt to get to the lows, and we would suggest that will eventually happen if we manage to break the lows from this previous week.

Because of the shape of the candle for this week, and more importantly the location – we will not buy this commodity at this point in time. We will only sell again, and as such it looks like we are ready to start doing so. We suspect that any daily close below the $2.80 level would be a significant enough signal to start selling this market yet again.

The supply and demand ratio is so out of whack in this market that it is hard to believe that demand will eventually catch up with the supply, especially in the economic environment we find ourselves in. Because of this, we think that the natural gas markets have much further to go on the downside, and have to agree that the idea of a one dollar handle really isn’t that outrageous at this point.

Looking at the overall market trend, it appears that the downdraft is far from being over and it is very easy for traders to get caught up in the excitement of the recent bounce, but when you look at it from a longer-term perspective like the weekly chart it becomes much more obvious that it was simply a blip on a much larger move. We expect lower prices in the future.

Click here to read Natural Gas Technical Analysis.

Originally posted here