Natural gas markets initially fell during the trading session on Thursday, dipping below the $2.60 level but recovered quite nicely after the inventory number came out as expected. With that in mind, we continue to trade on technical levels and there are a few that I am paying attention to. Obviously, the $2.60 level has shown itself to be technically important, but above there we have the 50 day EMA which is pictured in red on the chart. It currently is hanging about the $2.68 level, so I do believe that rallies are somewhat limited. After that, then you have to worry about the $2.76 level which should also be somewhat resistive.
NATGAS Video 17.05.19
To the downside, the $2.50 level continues to be crucial support, and a potential “floor” in the market. At this point, if we were to break down below there the market could go much lower. If we break down below that level, the $2.25 level would be the next target, and should be rather supportive. Ultimately, I believe that this market remains very soft, so I’m looking for an opportunity to start shorting the signs of exhaustion as they appear. If we do break above the $2.70 level, it’s very likely that we will find even more resistance closer to the $2.90 level. While you could be a buyer above $2.70, it would be a bit difficult to be confident. I believe that downward pressure will remain, as we are far too oversupplied in the natural gas markets to be confident in the longer-term bullish position.
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This article was originally posted on FX Empire
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