Natural Gas forecast for the week of July 7, 2014, Technical Analysis

The natural gas markets tried to rally during the course of the week, but found the $4.50 level to be resistive enough to turn the market back around. The market has formed a shooting star for the week of course, and we also have to point out that we have been rather consolidated of lately, as the market has been stuck between the $4.85 level on the top, and the $4.30 level on the bottom. That is what makes this shooting star forming where he did interesting to us, the fact that we are sitting on top of a well-established support level.

One has to pay attention to the fact that it is the summertime in the northeastern part of the United States, an area that is one of the most eager consumers am natural gas, but mainly for heating purposes. True, some industrial uses continue to propel the market as the demand for power will continue with a stronger than anticipated jobs number out of America, but ultimately that is not enough to change the demand picture for the time being.

If we get a break below the $4.30 level, we believe that this market could find its way down to the four dollars level given enough time. There is a lot of noise between here and there though, so expect a bumpy ride regardless. On the other hand, if we break above the $4.50 level, or more specifically the top of the shooting star, that signals that enough buying has come back into the marketplace to probably send price back towards the $4.85 handle, the top of the consolidation.

With this in mind, we need to see at least a daily close below the $4.30 before we start selling, and at that point in time we would also recognize that the market will more than likely move and its own accord, and we will have to be very patient with that move lower. We do think however, that a move above the $4.50 level in towards the top of consolidation would probably be the quicker of the two possibilities.