Natural gas markets rallied a bit during the course of the week after gapping higher on Monday. However, we continue to see a lot of resistance just above current trading, and as a result it is very likely that we are going to continue to see exhaustion being sold into. The $3.20 level is an area where we have seen a lot of trouble, and therefore I think at this point in time we will continue to see a lot of choppy and volatile trading, but it is worth noting that we are at the top of a bigger range.
NATGAS Video 07.06.21
If we were to break down from here, it is likely that the market could go down towards the huge gap underneath which is near the $2.70 level. With this, the market is likely to go looking there during the summer as although there will be a little bit more demand for cooling, the reality is that there is far too much supply out there for the market to chew through. Because of this, I like the idea of selling this market, but you are going to have to be very patient in order to pick up the potential profits that shorting this market this time a year tends to offer.
At this point in time, we could go as low as $2.50, but obviously it is going to take quite a bit of time to reach down towards that area. All things been equal, this is very volatile, but I do not think that natural gas will continue to go higher despite the fact that there is a bit of a commodity boom at the moment.
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This article was originally posted on FX Empire
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