Natural gas markets have rallied a bit during the course of the trading session on Tuesday to test the top of what could be a rising wedge. That being said, the market is likely to continue to go looking towards the 50 day EMA on any signs of bullish momentum, which would make a certain amount of sense considering that it is so cold. That being said, the 50 day EMA could cause a little bit of a short-term problem, so I would anticipate that there would be a little bit of a hesitation in that area even if we do take off to the upside.
To the downside, the market will more than likely test the $4.75 level for support yet again, and therefore argue for the idea of some type of supportive behavior. If we break down below there, then the market is likely to go looking towards the $4.14 level where the 200 day EMA currently sits. The 200 day EMA is rising, so that should offer a bit of support, but quite frankly we need to start looking at the possibility that we have already seen the highs for the winter.
I have the descending wedge March, and if we break down below the bottom of that I think we continue to sell off quite drastically. However, if we can rally to the upside, then it is possible that we have one more big pop due to the fact that colder temperatures outcome. That being said though, we are priced awfully high from a historical point of view.
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This article was originally posted on FX Empire
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