Natural gas markets have broken down a bit during the trading session on Friday again, as we had formed a couple of shooting stars on Wednesday and Thursday. The market simply cannot pick its feet up, and we are in a situation where the oversupply of gas continues to be a major problem. I think that the playbook here it’s rather simple, you simply sell rallies as they occur and show the first vestiges of failing. The $2.00 level will be massive resistance, extending all the way to at least the $2.20 level. If we break down below the 1.80 level, then the market can unwind quite drastically.
NATGAS Video 27.01.20
The 50 day EMA currently sits at the $2.20 level, an area that has been supporting resistance previously, so obviously I think that would attract a lot of attention if we could go to that area. Either way, this is a market that I believe continues to see a lot of trouble, and therefore until we get enough bankruptcies out there to crush the oversupply, this is a market that simply can’t take off. Looking at the scenario right now, I believe that you are looking at every $0.20 or so as an opportunity to sell. I don’t like chasing the downward momentum though, so I prefer looking at the exhaustive move in rallies after the pullback, so at this point that supply. Buying is all but impossible at this point, but eventually we will get enough of the supply drawdown that we will get an impulsive move to the upside that could create the next uptrend. We are quite a way from there though.
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This article was originally posted on FX Empire
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