Natural Gas Markets Give Up Gains to Form Ugly Candlestick

Natural gas markets initially gapped higher to kick off the week, and then shot towards the bottom of the massive descending triangle that we had previously formed. By doing so, the market is very likely to see plenty of selling pressure, and if we break down below the 50 week EMA, it is very likely that the market goes looking towards the $3.50 level, possibly down to the $3.00 level underneath, as it is the so-called “measured move” of the descending triangle that is sitting above.

NATGAS Video 17.01.22

All things being equal, if we do rally it is likely that we will see plenty of sellers above due to the fact that the natural gas markets have suggested that there are plenty of reasons to see this market drop. Quite frankly, the natural gas markets are oversupplied from a longer-term standpoint, so although it does tend to trade on the short-term weather patterns of the northeastern United States, the reality is that we are already trading the February contract and will soon start to focus on the month of March. That is when temperatures warm up in the US, so thereby it drives down the demand for natural gas going forward.

The only way I would be a buyer of this market is if we were to break above the top of the massive shooting star for the week, something that I just do not see happening anytime soon. All things been equal, this is a market that is a “fade the rallies” situation.

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