We attempted to climb above the 200-day exponential moving average as natural gas markets rose modestly during Wednesday’s trading session. In spite of this, the market has retraced a portion of these gains, and I believe we are currently consolidating in the same region, with the uptrend line providing some support. Considering that we have been in a large channel for quite some time, and it appears that this will continue, a short-term rally could re-enter the picture.
Nonetheless, if this market were to surge above $7.00, I would predict some selling pressure at the 50-day exponential moving average (EMA) near $7.58. Beyond there, we also have the $8.00 level, which might come back into play and provide some resistance.
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If we were to fall below the $6.00 level, the market would likely continue to see downward pressure, creating the potential for much lower prices. However, there are still a great deal of geopolitical forces out there, and nobody really knows how the European scenario will develop just yet. In any case, I believe that we are attempting to create a short-term base, creating the prospect of a short-term rebound, but I believe that it is rather restricted. The only thing you can depend on in this market is a great deal of choppy volatility, so you must exercise caution.
