Natural gas markets rallied significantly during the week, breaking towards the $1.75 level. We continue to see the $1.50 level underneath as massive support and we have just formed a little bit of a “double bottom.” There are several bankruptcies going on in the United States right now when it comes to natural gas providers, so this should help with the supply issue. This is not to say the natural gas is certainly going to be extraordinarily bullish, just that it should help alleviate some of the pressure.
NATGAS Video 06.07.20
With all of this in mind, I think that we probably have a move coming that should send this market towards the $2.00 level. Furthermore, we also need to keep in mind that the 50 week EMA is in the same neighborhood so it makes quite a bit of sense. With this price action, I do believe that we are going to make a move back towards that level, and perhaps try to break out. If we can break above the $2.00 level on a weekly chart, then it could open up a move towards the $2.50 level.
In that general vicinity you would start to see the 200 week EMA come into focus. The alternate scenario would be that we break down below the $1.50 level, which would be catastrophic for natural gas as this area has been in so important on longer-term continuous contracts. With this, I think we are pumping along the bottom and could see a bit of a bounce over the next couple of weeks.
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This article was originally posted on FX Empire
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