The short term trend in January Natural Gas has turned negative. Fridays exhaustion in buying came with a large scale sell off yesterday and good follow through today. It has dropped through a full trading range under $3.200. A close under 3.200 could put a cap on prices technically, and a trade range between 3.100 support and 3.200 resistance. Momentum studies are headed down below the over bought level, which should accelerate selling as support levels are penetrated. I look for the prices to fill the gap to around the 3.110 price level and wander around that as a support. However, bullish traders may attempt to keep the gap open and use the top as support at 3.150.
Forecasts call for below average temperatures in the East. Just the opposite in the West. Average to above temps west of Rockies. The Thursday storage number has an estimated draw in inventories, as opposed to an average build of 12-15 bcf. Last weeks number was 15bcf, which was spot on the est. I am recommending exposure to the short side of the market.
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