Natural gas markets rallied a bit during the day on Friday, reaching towards the $2.86 level before rolling over again. Natural gas markets continue to be very noisy, as we have a lot of questions out there as to whether the rally can continue due to the longer-term oversupply issues. The market continues to see this up-trending channel hold the markets intact, so it’s not a surprise it we can break out on a Friday. If we do break above the top of the uptrend channel, then I think the market could go to the $2.90 level, and that eventually the $3.00 level as it is a large come around, psychologically significant number and of course structurally important as well.

As we fell towards the end of the day, we remained within the overall consolidation for the day, but if we were to break down below the $2.83 level, we could drop towards the $2.80 level again, perhaps in a bid to build up enough momentum to go higher and break above the top of the channel. However, if we were to break down below the $2.78 level, we will at the very least fall towards the bottom of the overall uptrend channel, and perhaps even break down below there which of course would be very negative sign. With hotter temperatures coming in the United States, it’s possible that we may see more demand, and that could help lift this market in the short term, which typically that’s how natural gas markets work, in the short term.

NATGAS Video 21.05.18

This article was originally posted on FX Empire

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