Any short-term rally at this point in time that shows signs of hesitation, I think, will end up being a nice selling opportunity. I believe that this market will continue to look at the 200-day EMA above as a major barrier, and I’d be really surprised to break above there.
Key Support and Demand Factors
The market breaking down below the 50-day EMA opens up the possibility of a drop down to the $2.60 level. All things being equal, you have to keep in mind that this is a market that has a serious lack of demand at the moment. We did get a little bit of a hot couple of days in the United States that boosted things, but I think we fall right back down from here, and that does make quite a bit of sense.
Ultimately, natural gas, I think again, goes down to the $2.60 level. Later this summer, we’ll have another pop due to a heatwave, but we’re nowhere near that right now. What will be interesting is this winter, when the Europeans may have to step in and start buying a lot out of the United States, that will have a major influence on this market.
But as things stand right now, pretty calm, cool, and collected. I think we continue to see downward pressure. I don’t think it’s a meltdown, I just think there’s a serious lack of energy demand here.