Natural gas markets initially tried to rally towards the $2.78 level above but found enough resistance in that general vicinity to turn things around. I believe that the $2.80 level is the major level that people are paying attention to, as it has been resistive in the past. We then cratered during the trading session, breaking down to the $2.68 level. We got a bullish inventory number though, so it did cause a significant bounce. However, we are starting to roll over again, and now I think it’s only a matter of time before we reach a lower level. I recognize the $2.60 level as the massive support level underneath that we should target. The fact that we had such a bullish candle and then started to roll over again after the inventory number tells me that there is still plenty of selling pressure out there.
I think that this market will continue to be a “sell the rallies” situation, as the oversupply of natural gas continues to be an issue. Granted, the draw from inventory was higher than anticipated, but we are getting towards the warmer for the year in North America, and that will put a massive amount of demand destruction for the market to think about into play. I think that we will continue to see a lot of volatility, but I still favor the downside as I don’t see the oversupply of natural gas in the nanny time soon. A breakdown below the $2.60 level opens the door to the $2.50 level.
NATGAS Video 20.04.18
This article was originally posted on FX Empire
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