Natural gas markets have been range-bound for the last three weeks as the $5.00 level has offered a bit of a ceiling. That being said, we also have a floor just below.
Natural gas markets have gone back and forth during the course of the week as the $5.00 level has offered a certain amount of a ceiling over the last month or so. That being said, the $4.50 level has offered a bit of support as well. In other words, we are simply grinding back and forth overall, and I think that is probably going to be the case until we get some type of momentum built up. In fact, we are squeezing a bit at this point, so I think we will have to trade short-term range-bound moves or wait for that break down below $4.50 to start shorting.
Keep in mind that temperatures are starting to pick up again, and that should drive down the demand for natural gas. There is talk about the United States perhaps supply in Europe with LNG, but that is a story for next year, not this year. Ultimately, this market will probably drop but it may take some time to get there. If we do break down below that $4.50 level, then it is likely that the market could go looking towards the 50 Week EMA which is sitting at the $4.11 level. After that, then the $3.50 will be targeted.
If we were to break above the $5.00 level, I would be cautious up there because we have seen so much selling pressure previously, and of course, it is the wrong time of year for higher prices from a cyclical standpoint. Whether or not the changes next year is still an open question, but right now that is not my focus.
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Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.