As low liquidity may have been a factor, natural gas markets may have gapped lower to start the trading week on Monday, but it is likely that we will finally breach below $6.50. Once we do, the uptrend may come to a halt, as the inability of the Freeport facility to generate LNG for the European Union will continue to present problems. Moreover, last week’s enormous candle suggests that the market will decline.
Ultimately, any rise at this time should be viewed as an opportunity to short the market at the first symptoms of tiredness, unless we manage to reverse course and surpass $8.00. The 50 Day EMA is currently located at $7.62 and is beginning to decline. I believe this is a circumstance in which the entire market sentiment is beginning to deteriorate, so I believe it is only a matter of time until we see even more pessimism.
Obviously, a break over the $8.00 barrier would be a very optimistic indication and might take the market back up to $9.50. At that point, you’re looking at a potential $10.00 price objective, but it seems more probable than not that we’ll continue to see a lot of negative news. Ultimately, the scenario continues to unfold, but one must ponder how much higher the price of natural gas may go with the prior momentum. Volatility will be a significant factor.
