Natural Gas forecast for the week of October 9, 2017, Technical Analysis

Natural gas markets had a very negative week, breaking below the $3 level again, and slamming into the $2.85 level, an area that has been rather supportive. The next support level is closer to the $2.75 level, and I think that will be the next target. Rallies will be sold, but on longer-term charts it’s difficult to get the appropriate risk to reward to make trading viable. Because of this, I believe that this continues to be a short-term traders market, unless you are waiting for a move towards the $3 level that can be faded. Remember, US fracking companies become profitable once we reach the $3 level, and with the massive oversupply of natural gas that they have currently, they are very quick to dump their supply to save potential losses.

Ultimately, rallies should continue to be opportunity, and if we can break down below the $2.75 level, the market will probably go to the $2.50 level where we have seen a massive amount of support. At that point, the market becomes very ominous if we break down. I believe that even though we are getting close to colder temperatures in the United States, it’s likely that the oversupply keeps the price of natural gas down, and therefore I’m not interested in trying to buy it. I recognize that we will bounce, but those bounces should have you looking for signs of exhaustion to take advantage of above. Because of this, I believe that the overall back and forth with a slightly bearish attitude will continue, which of course favors shorter term traders overall. If you are trying to build a longer-term position, you might be waiting for some time. However, if we were to close on the weekly chart above the $3.10 level, that could be an interesting opportunity to go long, but I don’t see that happening.

NATGAS Video 09.10.17