Natural gas markets climbed slightly throughout the trading session on Wednesday, indicating renewed strength. However, we have given up a significant portion of our gain in order to produce a shooting star. At this point, the market is likely to face more pressure in both directions, although the uptrend may have peaked for the time being.
The scale of the candlestick kill hinted a possible pullback, but I believe it will only be a matter of time until the buyers arrive. To be honest, the natural gas markets continue to be volatile, and we will likely have to be cautious with any position sizing on any trade we are participating in since the natural gas markets are out of control.
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If we break below the bottom of the shooting star, that is a potential breakdown in the making, as it is a technical indication to begin selling. There are a lot of other elements to consider before that leads to a trend change, but at this point, it’s worth noting that below the $9 level, there will probably be a lot of individuals who have chased looking to get wounded.
On the other hand, a break over the top of the shooting star very probably opens the door to a move to the $10.00 level. That is an area where I believe there will be significant psychological resistance, so it will be interesting to see how this plays out. In principle, you might argue for a sloppy inverted head and shoulders, but with all of Vladimir Putin’s shenanigans with the EU, technicalities are probably only worth so much.
