The natural gas markets initially tried to rally during the week but gained a very little before rolling over. The market looks as if it is going to test the $2.60 level, which is support that extends down to the $2.50 level. The market looks likely to continue to see negative pressure in general, but we are sitting just above an area that has been crucial for some time. Because of this, I think that it is good to be difficult for longer-term traders until we break through the $2.50 level. The alternate scenario of course is to break above the top of the shooting star for the week, reaching towards the $3.00 level, because the $2.80 level has been important. The longer-term trader will continue to find issues, so I like the idea of trading the shorter time frames, and at this point I think the longer-term trader needs to see some type of exhaustive candle above to start shorting again.
I believe that given enough time, we will get that opportunity, but until then longer-term traders can be left on the outside looking in. I think that eventually we will get the relief rally that offers that opportunity, but until then you were forced to trade shorter time frames. Longer-term, I remain very negative on natural gas, and believe that eventually we may even break down below the $2.50 level, but it is going to take a significant amount of momentum building to make that happen.
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