Natural gas markets initially gapped to kick off the trading session on Friday but gave back the gains to show signs of weakness. Because of this, I think we continue to see the $6.00 level as an area of extreme resistance, which makes sense considering that the market would look at this large, round, psychologically significant figure as important. If we break down from here, it is not necessarily a signal to start selling, but perhaps simply an opportunity to pull back and find a certain amount of support.
NATGAS Video 04.10.21
If we break down below the candlestick on the Thursday session, I believe that opens up a possible move down to the $5.00 level underneath, which is where we had roughly bounce from previously. Nonetheless, the market is very bullish, so regardless of what happens next, I have no interest whatsoever in trying to short this market, because quite frankly Europe is still starving for natural gas and the one thing that has probably kept this market from going even further to the upside is the fact that we got here so quickly.
Looking at this market, it is likely that we continue to see a lot of choppy behavior, but I would love to see a nice pullback in order to pick up a bit of value. This will be especially true if the winter ends up being cold because it will drive up demand even further. With this being the case, market is one that you do not sell, but you look for signs of value in order to take advantage of temporary pullbacks in what has been a very bullish set up.
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This article was originally posted on FX Empire
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