Natural gas markets looking for support

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January 7, 2019 1:08pm NYSE:UNG

natural gas pipe

From Christopher Lewis: The natural gas markets gapped lower to kick off the week, and then broke down below the $3.00 level. By doing so, we entered a very bearish phase of the selloff, but by the end of the week, we had started to see a bit of resiliency. At this point in time, I think that the market will probably try to rally from here and go looking towards the top of the gap, closer to the $3.30 level. Natural gas had gotten way ahead of itself. However, now it looks as if it had gotten ahead of itself to the downside as well. Overall, I think that a short-term bounce is coming but it should present itself as a nice selling opportunity. The huge moves are over, and therefore it’s likely that it will be difficult to deal with this market from a weekly standpoint. I believe that we are going to go back and forth in a relatively tight range, but I certainly feel much better in the selling side than the buying side.

I believe at this point the $3.50 level is going to be a bit of a “ceiling”, and therefore you should pay attention to it. If we rally towards that area and show signs of exhaustion, that is a clear selling signal. If we show signs of exhaustion at the top of the gap, that’s a nice selling opportunity as well. The alternate scenario is that we break down below the hammer for the week, but that seems very unlikely.

This article was originally posted on FX Empire

The United States Natural Gas Fund L.P. (UNG) was trading at $24.39 per share on Monday afternoon, down $0.70 (-2.79%). Year-to-date, UNG has gained 4.59%, versus a -3.87% rise in the benchmark S&P 500 index during the same period.

UNG currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #52 of 108 ETFs in the Commodity ETFs category.

This article is brought to you courtesy of Yahoo Finance.

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