Natural gas rallies during Thursday session, breaking the $2.75 level

Natural gas markets have rallied during the trading session on Thursday as the storage numbers came in at 68 billion, which is just slightly above consensus. This has been very bullish for the market, and now that we are clear the $2.75 level, I believe we may be ready to see some type of trading opportunity presented itself. · FX Empire

Christopher Lewis

Updated Thu, May 10, 2018, 10:22 PM

One of the trickiest things about trading natural gas is that it tends to be very erratic. However, if you look at the longer-term charts you can often make more sense of what’s going on, and while the momentum traders have jumped in on Thursday to push this market towards the $2.77 level as I record this, there is a significant amount of resistance near the $2.80 level, and I think that the sellers will probably come back in to the market in that area. However, if we break above the $2.82 level, then the momentum will most certainly send this market looking towards the $3 level above.

I think that the $3.00 level above is going to be massive resistance and I would be quite surprised if we can break above there. At that point, I would become much more aggressive in my selling on signs of exhaustion. However, in the meantime I think that we are overbought and it’s only a matter of time before the sellers return. This is why I don’t think we break above the $2.80 level and the short-term, as this move has been too quick. Quite frankly, the storage number wasn’t bullish enough to change the longer-term outlook for this market. The cold is gone in the United States and although we are lower with storage than people are used to, it’s only a matter of time before that gets refilled.