The natural gas markets struggle during the previous week, initially trying to break above the $3.75 level before breaking down to fill the gap at the $3.25 level. This of course is a very bearish turn of events, but we have sold off so rapidly that it’s difficult to sell at this point.
Natural gas markets initially tried to turn around and break above the $3.75 level, but then fell hard from there to reach towards the $3.25 level. This is an area where we had a gap previously, and of course this will attract certain amount of attention. The 50 EMA on the weekly chart has offered technical support, but quite frankly I think what we are more than likely going to see is a short-term bounce that we consider selling again. I think the $3.75 level will also offer resistance, and I’d be more than willing to sell an exhaustive candle in that area. I also believe that the $4.00 level is even more resistance based upon exhaustion.
I think at this point we will continue to see rallies fail, because we are starting to focus on the springtime in the United States which is a historically negative time. Beyond that, there are concerns about global growth, and that of course will weigh upon the idea of higher natural gas demand. With that in mind, and the fact that we got well ahead of ourselves early in December, I think that the entire bubble has popped, and now we are looking at a return to normalcy. With that being the case, there’s so much in the way of supply that rallies are to be sold as we should continue to not only break down to the $3.25 level, but I think we will eventually go to the $3.00 level as well.
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