Natural gas markets posted a bearish spread at the start of the session on Friday, before climbing back to where they started. Having done that we have encountered more resistance and have since formed a shooting star pattern.
Therefore, I believe that the natural gas markets will show certain doubts in this area and therefore I believe that we could see a significant setback. The $ 5.00 level could be interesting as it is a round and psychologically significant number, and perhaps even more important, it is where the last candle with high momentum formed.
I have been saying for some time that after such an exaggerated rally we need to see a correction that offers us a value that could be between the level of $ 5.00 and the support area of the level at $ 4.80. If we break below this last level, the market is likely to head towards the $ 4.50 level, and the 50-day average is just below the $ 4.30 level and is starting to rise by that there should be support there.
At a fundamental level the market is still in high demand in general, especially as Europe itself is struggling to obtain supplies. I see the market likely to pull back mainly due to the fact that we are starting to see headlines coming from the EU that factories are closing due to lack of power. Normally when it comes to this type of situation the market behaves in a very unpredictable way so you have to be very careful.
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This article was originally posted on FX Empire