Natural Gas Price Forecast – Natural Gas Markets Continue to Drift Towards Gap

NATGAS Video 02.06.20

Natural gas markets initially fell on Monday to break down below the $1.80 level again. However, it should be noted that there is a major gap underneath, which has been filled and typically will offer a bit of support. Having said that, the market looks highly likely to continue to see noisy action down in this area as it looks like we are trying to form some type of rounding bottom. This is a terribly slow and arduous pattern that seems to take forever to form.

This is a trend reversal pattern, at least in theory but I think more than anything else what we are seeing here is the fact that the market is so cheap at this point it is almost impossible to imagine a scenario where it breaks down too much farther. The $1.50 level looks to be a massive floor in the market not only from recent trading, but from historical pricing as well.

At this point, it is probably easier to buy value on dips that it is to fade rallies, but I would be a seller near the two dollars level. I can also say that I would be a buyer near the $1.70 level. We are essentially in the middle of that range right now, so it is a bit difficult to get overly excited one way or the other. I think we probably drift a little bit lower from here and then find buyers yet again. This is a market that is going to continue to be very noisy due to oversupply but we also have quite a few looming bankruptcies that could drive down supply eventually.

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