Natural Gas Markets Continue Breakout

Natural gas markets have shown negativity yet again, as we continue to see the effects of the storm in the northeastern part of the United States abate. At this point time, the market is likely to continue to see negativity, especially as we are already trading the February contract and quite frankly the winter has been much milder than anticipated. Because of this, demand for natural gas has been lower than anticipated, and the effects of the hurricane/flood issues previously has been rectified.

NATGAS Video 21.01.22

Looking at this chart, we have filled the gap from previously, so it does make a certain amount of sense that we might find a little bit of a bounce here. However, that bounce should end up being a nice selling opportunity going forward, as the 200 day EMA above will offer resistance. To the downside, the market is more likely than not to go looking towards the $3.50 level, which had been support, and then eventually the $3.00 level after that, which is the “measured move” of the descending triangle above that got broken. Regardless, it does make a certain amount of sense that the $3.00 level is targeted, simply because it is an area of “fair value” on a lot of longer-term charts in this market.

Unfortunately, a lot of people that I have dealt with have gotten sucked into the idea of buying natural gas due to the fact that there is a major shortage in both Europe and Asia, but ultimately this is a US centric contract, so you need to understand what is going on weatherwise in the United States to trade this market effectively.

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