Crude oil took a backseat to the natural gas market this week with prices soaring 7.52% since last week’s close and 16.35% since the close on May 27. Thursday’s close in the July Natural Gas futures market was $2.593, its highest close since the week-ending January 8.
The main trend is up according to the weekly swing chart. The strong close has put the market in a position to take out the high for the year at $2.635. This is followed closely by another top at $2.684. The rally could expand greatly above this level with the next top coming in at $2.961.
The main range is the $3.227 top from the week-ending May 22, 2015 to the $1.939 bottom from the week-ending March 11, 2016. Its retracement zone at $2.583 to $2.735 is currently being tested. A long-term downtrending angle passes through this zone this week at $2.667, making it a valid upside target also.
Trader reaction to this retracement zone is likely to determine the strength and direction of the market over the near-term. Short-sellers see value so they are likely to initiate new position. Speculators are buying and they don’t care too much about value. They are more interested in maintaining the current upside momentum.
(Click to enlarge)
Based on the close on June 9, the direction of the market on Friday and next week is likely to be determined by trader reaction to the main 50% level at $2.583.
A sustained move over $2.583 will indicate the presence of…