Natural Gas Forecast January 21, 2013, Technical Analysis

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Posted January 19, 2013 3:54 (GMT) | By FX Empire Analyst - Christopher Lewis | Print | Font Size       | Add a comment

The natural gas markets rose during the session on Friday in order to break above the $3.50 level. This represents a breakout of swords and signals that we could go as high as $4.00 in the medium-term. However, the longer-term trend for natural gas has been quite varied, and we are already approaching the midway point for winter in the northeastern United States.

In essence, we are still very bearish natural gas for the long term but recognize the fact that this market is poised to continue rising in the short-term. Is because of this that we believe if you are patient enough you will get your trading opportunity to short this market again and watch prices fall apart. Slightly colder temperatures are to blame for the recent rise, but in reality there isn’t anywhere near enough demand to take out the supply that we currently see in the marketplace.

We see resistance areas at the $3.70 level, the $3.80 level, and the $4.00 level. Because of this, it’s just going to be far too difficult to be long of this market and be comfortable. With this in mind, we actually are looking at all three of these levels as potential turnaround point where we might see an exhaustive candle. On the daily close that looks exhausted, we would be more than willing to start selling this market as it has been so strongly bearish for so long.

Even if we are currently seeing a trend change, we would need to clear the $4.00 level be in a confirmation stage. If that happens, obviously we would have to rethink a lot of things, but right now it looks very unlikely even though we’ve seen fairly strong buying over the last several sessions.

It is the fact that we have bounced so sharply from the $3.10 level that makes us think that this rally will only have limited staying power. Because of this, we believe that the next three or four sessions should provide either a shooting star or some type of bearish candle in which to start selling.

Natural Gas Forecast January 21, 2013, Technical Analysis Natural Gas Forecast January 21, 2013, Technical Analysis