The natural gas markets formed a harami candlestick during the trading session on Thursday, showing that perhaps we have a market that is ready to rally. That being said though, the market is very unlikely to be able to be bought, even if we do get a spike higher. Quite frankly, the market has since passed any opportunity to chew through the overall supply, so rallies at this point should be looked at as selling opportunities. This is going to cause major havoc in the natural gas markets, because this is the time year that we should be burning through a lot of supply.
NATGAS Video 17.01.20
At this point, if the market does spike higher you should just simply sit on the sidelines look for the first signs of weakness to start selling again. At this point, we are also starting to see natural gas companies in the United States get rated junk by Moody’s, which is a bad sign indeed. Quite frankly, they cannot operate at these extraordinarily low prices, showing just how soft and bearish this market truly is. Eventually, they will start to die off, meaning less drillers, meaning higher prices. However, that’s a story down the road that could happen, certainly not right now. The market continues to see sellers commit on these rallies so there’s no need to fight the natural order of things. On a rally, I’m very interested in shorting that the 50 day EMA, and most certainly at the 200 day EMA. Wait for a long bullish candlestick or two to start selling at the first signs of weakness, it will be the best risk to reward shaped trade that you can make.
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This article was originally posted on FX Empire
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