Natural Gas Markets Have Explosive Day on Wednesday

Natural gas markets have rallied significantly during the course of the trading session on Wednesday to break above the 200 day EMA. That being said, the market is a bit overdone, so I am looking for signs of exhaustion to start shorting yet again. In fact, we are starting to pull back just a bit from the 50 day EMA, so it makes a certain amount of sense that short sellers are starting to come back into the picture. On the other hand, we are probably going to see a lot of volatility so it does make a certain amount of sense that we could return back to the previous consolidation area.

NATGAS Video 27.01.22

If we do break above the 50 day EMA, then that only makes this more of a compelling short near the $4.50 level. Signs of exhaustion or what I am looking for, and while we do have it on the short-term charts, it is likely that we may get plenty of opportunities to the downside as we start to head into the springtime in America. That will almost certainly drop the value of natural gas over the longer term, so given enough time I think we probably drop towards the $3.00 level. This is the “measured move” from the descending triangle that we broke down from and have retested. All things been equal, I think $3.00 makes a lot of sense due to the fact that it has been the “anchor Price” over the longer term that the market seems to be attracted to. That being said, position sizing will be crucial as well.

For a look at all of today’s economic events, check out our economic calendar.