The Overall Trend is Still Down for Natural Gas

December 21, 2017 10:07AM CST

Yesterday’s close lower signals for a probing lower, searching for bottom.  Support can be seen near the 2.500 mark.  Resistance just below 2.800, above Monday’s is seen as a corrective high to turn the major trend.  So far, today’s candle looks promising for the Bull camp, new lows were reached, but price action seems to be trying to fight back toward yesterday’s close.  Momentum indicators are bottoming.  Divergence between the indicator and price action may accelerate the upward move.  The large short position cautions that if buy stops start getting hit beware of a quick move in the opposite direction.

I’ve seen estimates for a very large draw (-160 bcf).  A large draw may serve to balance December supply and demand, and drive prices back to a higher range.  A smaller than expected draw might send prices tumbling for another day.  Below normal temperatures are forecast for the end of December.  It seems that old man winter will finally arrive.  A cold extension to the longer term forecast could send prices back to the 2.900 to 3.000 range.  I’d like to be long once divergence is confirmed.  Careful bullish exposure through option and spreads might be warranted. 

Natural Gas Feb '18 Daily Chart


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