Natural gas markets have been explosive during the course of the week if you will, as we have reached towards the $4.75 level. The market has pulled back just a bit from the previous triangle though, and therefore it is likely that we continue to see selling pressure in this general vicinity. This will be especially true if we somehow get towards the $5.00 level. All things been equal, this is a market that I think does sell off but keep in mind that at the end of the week we had options expiration in this commodity.
NATGAS Video 31.01.22
Natural gas is going to continue to see significant moves based upon short-term weather in the United States, which of course have plunged in the short term. The northeastern part of the United States is freezing at the moment, but as soon as that goes away in the weather report, this thing will fold like a napkin. Ultimately, the market could go down to the $3.50 level, and even though I am still very bearish, I recognize that we will get these occasional bursts of buying pressure. The contract that we are trading is the March contract, and then of course suggests that we will have to start pricing in spring rather quickly.
I suspect that you will have to be cautious about position sizing, this looks like it is setting up to be a nice selling opportunity. I have no interest in buying this contract regardless of what it does, and therefore I like the idea of selling at extraordinarily high levels.
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.