Natural Gas Technical Analysis
The natural gas market has gapped above the $3 level a bit during the early part of the Wednesday session, and it has reached toward the 200-day EMA. I’m watching this very closely because the $3 level has been important, and we are getting ready to roll over into the November contract. That could be part of what’s going on here.
I do like the idea of going long in this market into the winter. We are rolling over to that November contract, and we’re getting close. This could be the first shot across the bow. We’ll have to wait and see.
Short-term Pullbacks, Could End Up Being Buying Opportunities
However, we have to recognize that the natural gas market is going to continue to see a little bit of support near the $2.80 level, and that $2.80 level remains a very important floor in the market.
As far as the upside is concerned, I’m looking at the 200-day EMA and $3.08 as a barrier. If we can break above there, then the $3.35 level could be targeted, as it was a major area of supply.
Keep in mind, though, supply in the United States is still pretty heavy. We are multiple percentage points, maybe 5%, above the five-year average storage of natural gas, so there is still a bit of a drag on pricing. But at the end of the day, things are getting better. We are rolling into that season, so now I’m shifting from what was bearish to neutral to slightly bullish, with caution.
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