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Natural gas markets continue to be very noisy, as we go back and forth. We formed a shooting star during the previous week, which of course is a very negative sign. It now looks as if we are somewhat overextended at this point, and I think a pullback makes a lot of sense. At this point, I believe that we will probably pull back towards the $3.10 level, perhaps even the $3.00 level after that. At that point, I would anticipate that buyers will come back into the marketplace due to the fact that we are in the seasonal a bully bullish time of year. If we were to break down below the $3.00 level, it’s likely that we probably unwind all the way back to the $2.75 level.
At this point, I believe that the overall attitude of traders is one that is bullish, due to not only the season, but I think they also are trying to chew up a massive amount of supply. Natural gas suddenly becomes much more profitable for American fracking companies above the $3.00 level, so expect a ton of supply to be leveled on the market. I anticipate that we will see a sharp pullback, followed by another rally in this market, to help the seasonal trade. We are trading the November contract, so at this point it’s likely that we will continue to see people trade the season more than anything else.
This article was originally posted on FX Empire