- The natural gas market was very noisy during the trading session on Wednesday, which should not be a surprise because we are getting ready to roll over on Friday to the November contract.
- This causes some fluctuations in the market and a lot of noise under the best of circumstances.
- That being said, we have recently pulled back to test this gap, and the bottom of the gap is the $2.70 level, but we may not actually fill it. We may have just seen the bottom.
At this point, it is likely to be a situation where eventually we go higher, and Friday's open will almost certainly be a potential bounce to the upside as traders focusing on November recognize that there will be more demand for natural gas than there was in October.
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Friday Begins the November Contract
The November contract does begin the colder part of the year for the United States and that in and of itself is generally positive. The area above does offer a significant amount of resistance though in the form of the $3 level right along with the 50 day EMA in the $3.20 level as well. I think there's a lot of work to get above there, but if you have the ability to trade a small position, at this point, I'm thinking that we are pretty close to the bottom, and therefore, it might be worth starting to build a position.
Obviously, it's going to be volatile as we are trying to form some type of floor, but it is worth noting that we are right at a major uptrend line, so even if we do fall to the $2.70 level or so, that is something that I think comes into the picture as well. Ultimately, the next couple of months really should start to pick up the buying pressure on natural gas just due to the cyclicality of the market itself.
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