The natural gas markets have initially falling during the trading session on Monday, but then turned around towards the $2.83 level to show signs of strength again. The market is very volatile, but quite frankly the financial markets in general have been very noisy, so of course natural gas will be any different. I think that we do eventually go higher, but we may need to have a couple pullbacks to get value hunters into the situation. I believe that this market will go looking towards the $2.90 level, perhaps even the $3.00 level. Once we get to that area, I suspect that the selling pressure will probably overwhelm as it is a longer-term resistance barrier for the longer-term consolidation.
If we do break down below the $2.82 level, the market probably goes down to the $2.78 level next. That’s an area where I think heavy buying would come back in, but if we were to break down below that level, then we would probably go back down to the $2.70 level which is the bottom of the longer-term consolidation area, a zone that extends down to the $2.60 level. The volatility is going to continue to be a major issue here, but overall, I believe that it’s probably better to buy dips until we reach towards the $3.00 level, a play that has worked in both directions for some time.