By FXEmpire.com
Natural gas markets surged during most of the week, only to turn around and form a shooting star as they fell back down. The three dollar level is currently being retested, and the shooting star sitting just above it. We feel that if we can break the bottom of the shooting star we will retest the bottoms as this market has been in such a bearish trend for so long. It’s been a nice right higher, but quite frankly this could just simply be another short-term rally coming to an end.
The candlestick itself is an excellent trading signal. Obviously, if we can break the bottom of the shooting star we would be more than interested in selling as it shows a continuation of the downward pressure. However, it should also be noted that a break of the top of a shooting star shows resistance giving way. In fact, we have the $3.20 level as resistance that has to be overcome in order for us to go long at this point.
Hotter temperatures in the northeastern part of United States could continue to drive demand for natural gas going forward, but the truth is that the summer is coming to an end, and demand for natural gas should start to wane until winter comes. If there is a warm winter, this will cause have a in the natural gas markets as there is still plenty of it left over from the previous winner. Add to that the fact that over 14,000,000,000,000 ft.? of natural gas has been found in the United States over the last couple years, and we have a situation where natural gas will probably never command the premium that once did just a few years ago.
If we can break above the top of the shooting star, we see the next stop as the $3.50 level. There is essentially air between here and there, and above that area we feel that we could even see an attempt to make the $4.00 handle. However, if we break the bottom of the shooting star, we think that we will run back down to at least the $2.50 level.
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Originally posted here
