Natural Gas Weekly Price Forecast – Gapped Lower and Then Fell Hard

Christopher Lewis
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Natural gas markets have gapped lower to kick off the week, and then broke down below the $3.00 level to show signs of weakness. Natural gas had been supported by the idea of supply coming off-line as US production was frozen. Furthermore, cold temperatures had hit the United States at the same time, driving up massive amounts of demand. However, natural gas is a market that is extraordinarily oversupplied in the United States and Canada, so quite frankly it is going to be very difficult to imagine a scenario where we began a longer-term bullish market.

NATGAS Video 01.03.21

Furthermore, we are looking at springtime coming and therefore we would see quite a bit of demand destruction as temperatures rise. Based upon the candlestick that we have seen for this week, it certainly looks as if we are starting to see the cyclical trade come back into play, meaning that we will see natural gas fall rather hard. I think at this point short-term rallies are going to be sold into just as a break down below the bottom of the candlestick should be sold into as well. To the downside, I believe that the $2.50 level will of course attract a certain amount of attention, but then we could very well go down to the $2.00 level given enough time.

I believe that we have recently made a “double top” as seen on the weekly timeframe. I have no interest in buying this market and will continue to fade signs of exhaustion after short-term strength. Quite frankly, natural gas is a commodity that is a “one-way trade” most of the year.

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This article was originally posted on FX Empire

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