Natural Gas Forecast October 27, 2014, Technical Analysis

Natural gas markets had another negative session on Friday, as the bearish momentum continues. We even broke below the $3.60 level at one point during the day, and that of course is a very bearish sign. The market breaking down over the last week below the massive supportive area of course is a very negative sign as well, and we believe that the natural gas markets will more than likely head to the next natural round number, the $3.50 level.

A warmer than anticipated winter looks set to happen in the northeastern part of the United States, and that of course will drive down demand for natural gas. On top of that, industrial demand isn’t that high either, as global markets continue to show signs of weakening. That being the case, it’s very likely that natural gas will continue to be on its back foot going forward, and the fact that there is a seemingly almost endless supply of natural gas in North America certainly won’t help the situation either.

Any rally at this point in time should be a nice selling opportunity, as the $3.80 level above should be resistive. After all, that was the previous support level, which of course is a classic form of technical analysis, finding previous support to now become resistance. With that being the case, we would not hesitate to sell a resistive looking candle between here and the $3.80 level even if we do get some type of bounce. At that point in time, it would simply be a matter of the market looking for more sellers to continue the downtrend and perhaps build up enough momentum to smash through the $3.50 level, which while we are not calling for that move yet, we do certainly believe it could happen.

If we do get below the $3.50 level, we feel that more than likely we will then head to the $3.00 level after that, as we simply do not have anything underneath to support this market at the moment, and quite frankly don’t see anything that’s going to step in and do so anytime soon.