The natural gas markets initially fell during the week, reaching down to the $2.85 level but then rallied enough to form a bit of a hammer. However, this is a bit misleading as the Friday session with a massive gap higher that saw the market roll over to try to fill that gap. Nonetheless, there is still a significant amount of noise above, so I think that the sellers will return rather soon. The natural gas markets continue to be the realm of short-term traders mainly, as we have not had a significant move on the longer-term charts for several months. I think now that the markets have settled into this range, it’s almost impossible to deal with these markets from a longer-term perspective, so I believe that looking to short-term charts will be the best way going forward.
The $3 level continues to be a bit of a magnet for price, so I believe that the markets will be very noisy.
Looking at the longer-term charts, there is no clear direction at the moment, so I don’t see any reason to put money into the market for the longer-term play. Short-term traders of course will continue to flock in this market, because quite frankly it has been very reliable for some time. Alternately, we will eventually break out, but I don’t think were quite there yet. Ultimately, if we break above the $3.15 level, then we could start buying on the longer-term charts, but until then it’s almost impossible. Alternately though, if we break down below the $2.75 level, we could breakdown drastically. Overall, I prefer to trade this market from the hourly chart as we have such conflicting pressures over the last several months.