Natural gas markets have gapped lower to show signs of real weakness at the open on Monday, as we have slammed into the $4.75 region yet again. This is an area that has been supportive multiple times, and on today’s chart I have drawn what could be looked at as a potential descending triangle. In other words, as time goes on it becomes increasingly likely that we have put in the top for winter. Keep in mind that we are trading the January contract, so that would make a certain amount of sense. If weather reports start to factor in warmer temperatures for late January/early February, that will put even more pressure on this marketplace.
NATGAS Video 30.11.21
There are concerns about industrial demand, but quite frankly I think that is just cyclical noise. You could also make a bit of an argument for a “complex head and shoulders”, but the biggest problem with natural gas is that it is an extraordinarily noisy market, and therefore yet to be very cautious with your position size of each trade. You only add when the market proves itself. If we break down below the $4.75 level on a daily close, I am going to shift my entire narrative to bearish positioning. In fact, the triangle measures for a move down to the $3.00 area, which would probably be more of a longer-term situation. Ultimately, the market will decide what it wants to do next, but after the Monday candlestick, one has to ask whether or not we have enough momentum to change this overall attitude? Remember, you are talking about futures markets here, not what the weather is like today.
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