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Natural Gas rallies on Tuesday, testing resistance

By:
Christopher Lewis
Updated: Apr 25, 2018, 05:42 UTC

Natural gas markets have rallied significantly on Tuesday, gaining over 1% as I record this. However, there is a significant amount of resistance above, especially near the $2.80 level. I think that the market will eventually find reasons to turn around, as we have been consolidating longer term, but a breakout could be a sudden short-term buying opportunity.

Natural gas daily chart, April 25, 2018

Natural gas markets went sideways initially during the trading session on Tuesday, but then reached towards the $2.78 level. I see a significant amount of resistance at the $2.80 level above, an area that has been resistive more than once. I think that if we can continue to see upward momentum, the market could then go as high as the $3.00 level, an area that is even more resistive. I think on the breakout, there could be a short-term buying opportunity, but I prefer to look for exhaustive and resistive candles to start shorting. I anticipate that this is essentially going to be a “2 speed” market if we do get a breakout, as there is so much in the way of noise and commotion in this market.

Longer-term, you know that I believe that the oversupply is going to be a consistent problem in this market, and therefore I think that any rally should have you thinking that waiting for a nice cell signal could be the way to play. I think that with warmer temperatures coming in the next few weeks in America, it’s likely that we will continue to see bearish pressure above as well. Ultimately, this is a market that I think continues to offer plenty of selling opportunities, but I’m not blind to the fact that we could get a bit of a quick move to the upside and would be willing to play a small position above $2.80, but only if I could watch it. Otherwise, I’m looking to sell.

NATGAS Video 25.04.18

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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