The 50-day EMA currently sits at the $3.35 level and is dropping, with the $3.50 level offering even more resistance.
Natural Gas
As you can see, the natural gas market has fallen a bit during the trading session here on Monday as traders are reacting to the tweet that Donald Trump released early in the morning that the Iranians and the Americans are talking. With that, it gave a little bit of a risk-off type of trade, maybe ideas that more natural gas will flow.
The reality is this is the US contract and most people out there who are trading natural gas trading Henry Hub natural gas. So, with that being said, I think you've got a situation where this market continues to be a scenario where you're selling any type of rally that shows signs of exhaustion.
Testing Critical Support Levels
The 50-day EMA currently sits at the $3.35 level and is dropping, with the $3.50 level offering even more resistance. All things being equal, this is a market where I think you continue to see signs of exhaustion as opportunity. I would not have any interest in rallying because quite frankly the demand is going to be falling apart over the next several months and I think we're going to test $2.80, possibly even $2.50 as the oversupply of natural gas in the United States is a very real problem.
As far as breaking above $3.50, that would take some type of external situation that would disrupt US supply. Right now, I just don't see that happening. We are more likely than not to go to see a much more robust winter this year because of exports, but as things stand right now, we're far away from that. I remain bearish, but I also recognize that this is a short-term trading environment.