Natural gas markets broke down significantly during the week, but then turned around to show signs of life underneath. After all, we ended up forming a hammer right onto trendline, so that is about as good of a signal as you can get. If we can break above the top of the candlestick for the week, the market is likely to go looking towards the two dollars level initially. After that, the $2.10 region is where the 50 week EMA is, and that could of course cause a certain amount of resistance.
NATGAS Video 15.06.20
Looking at the chart, we are forming a little bit of a rounding bottom, but we are not done with it quite yet. Because of this, we have to ask the question as whether or not we are forming a rounding bottom and will not truly know until we break back above the two dollars level. If we are not, then we are simply forming some type of consolidation, both of which offer more risk to the upside than down.
Do not get me wrong, this is not to say that we cannot break down but we are starting to see economies reopen, which should bring up demand and of course there are plenty of bankruptcies in the United States when it comes to natural gas companies, so that should bring supply down eventually. I believe we are in the process of the longer-term bottoming pattern, but this can take quite some time to play out.
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Read More: Natural Gas Weekly Price Forecast