continue to grind sideways

Natural gas markets continue to do very little, and the Wednesday session sees more of the same. The $3.00 level has offered significant support, and I think it should continue to be the case.

Natural gas markets continue to be very sideways overall as we hover around the $3.00 level. This is a market that has sold off rather drastically, so it makes sense that we would probably hang about. The gap above is of course going to offer a significant amount of selling pressure, but we also need to fill the gap in order to fill the technical needs of the market. The $3.30 level above should be a massive resistance barrier, as quite often you will see a gap filled only to turn right back around. We have seen the 20 day EMA turn down towards that area, so I think it’s only a matter of time before the sellers would come back in that area. We are obviously very bearish right now, but I think selling down here is probably risking “chasing the trade.”

I believe that there is resistance all the way to at least the $3.50 level, and the seasonality of bullishness in the natural gas markets is over. The $2.50 level could be a target, but I think we need to build up the momentum before we make that type of move. As temperatures warm up in the United States, that will continue to drive prices down, but a short-term cold snap may be enough to fill this gap. Overall, I’m essentially sitting on the sidelines and waiting for a better entry point in the market as we have gone too far to the downside and way too quickly. Selling rallies will continue to be the way forward.

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