Natural gas markets initially tried to rally during the trading session on Wednesday, but the wedge that I have drawn on the chart is still holding, and as we approached the downtrend line of that wedge, the market of course rolled over. I think at this point we have gotten far ahead of ourselves and we have probably seen the high for the year at the $5.00 level. We are in a seasonably strong time of year, but I think that the market has overextended itself. The natural gas markets will start trading warmer contracts soon, and therefore we should see natural gas starts to sell off.
NATGAS Video 06.12.18
I believe that the market breaking below the uptrend line should send this market much lower, perhaps down to the $4.00 level. That’s an area that should be significantly supportive, but if we break down below there I think that the market will go much lower. Rallies at this point should continue to be sold, as we continue to see plenty of exhaustion. Ultimately, I believe sticking to short-term charts should be the way to go, as the overall attitude of the markets seems to be a bit overdone, and I think that the market will eventually go back down to the $3.25 level, perhaps even lower than that once we get into the spring. If we did for some reason break above the $5.00 level, the market should go much higher as it would be a bit of a “blow off top.” Expect volatility regardless but I do favor the downside.
This article was originally posted on FX Empire
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