Natural gas markets rallied slightly during Friday’s trading session to defend the crucial $ 3.60 level. That being said, the market was probably out of breath more than anything else due to the fact that the end of the year was approaching and of course we had recently plunged quite deep. When you look at the longer term chart, you can see that we had passed below a significant descending triangle, and the movement measured from that potential breakout was down to the $ 3.00 level. We still have a long way to go before we get there, so I definitely think the downtrend still has legs.

NATGAS video 03.01.22

Whenever this market picks up, I look for signs of exhaustion that I can start selling. The 200 day EMA above at the $ 4.10 level is the market cap from what I can see, and it currently looks like it’s going to be threatened by the 50 day EMA as it is ready to break and form the so called “cross of death”. This is obviously a negative signal for the longer term, but at this point it’s hard to deny that it is a negative market to begin with. Warming temperatures in the United States will continue to drive down the value of natural gas anyway, so it’s hard to imagine that natural gas will suddenly take off. If so, I’ll look for signs of exhaustion that I can start shorting again because we’re way over-supplied.

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