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Natural gas markets have rallied a bit during the course of the trading session on Friday to clear the $4.00 level, an area that of course attract a lot of headline attention. That being said, you should also pay close attention to the idea of the heatwave out west continuing to drive up demand for natural gas, so with that being the case it does make sense that we continue to rally. Furthermore, commodities in general has seen a lot of bullish pressure and the “knock on effect” into this market makes quite a bit of sense.
NATGAS Video 26.07.21
To the downside, the market would more than likely see support at the $3.80 level, as it was the top of the previous consolidation area that I have marked on the chart. To the downside, even if we break down below there, I think there are plenty of buyers. When you look at the longer-term consolidation that we had broken out of a few weeks ago, it measured a $1.00 height. The $2.40 level was the bottom of that range, with the $3.40 level being the top, suggesting that on the breakout we could go as high as the $4.40 level.
Furthermore, there is also a bit of an argument to made for the idea of going to the $4.40 level due to the potential bullish flag that is on the chart as well. In other words, there are a lot of things working for natural gas or no, so it makes a certain amount of sense that we should continue to go higher. At this point, I would not be interested in shorting, but I also recognize that natural gas will be one of the first markets to roll over in the commodity space.
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This article was originally posted on FX Empire