Natural Gas Markets Have Second Elevated Day in a Row

Natural gas markets have gone back and forth during the trading session on Tuesday, eventually settling on dropping a bit. That being said, we are currently hanging around the $4.05 level, just as we did during the previous session. Because of this, the market is very likely to continue seeing a little bit of hesitation as the 200 day EMA has clearly made its presence known. Furthermore, the 50 day EMA is reaching down towards the 200 day EMA, so therefore it makes quite a bit of sense that we would continue to see downward pressure.

NATGAS Video 12.01.22

Beyond that, the market is likely to continue seeing a lot of noisy behavior in general, due to the fact that the most recent rally has been based more upon the idea of colder short-term temperatures in the United States, and not necessarily a longer-term demand picture. After all, we are already trading the February contract, which means that we are more than likely getting close to the end of any opportunity for the markets to rally of any significance. Because of this, I am looking for opportunities to start shorting, at the first signs of exhaustion or some type of bearish candlestick.

All things been equal, there is still a gap underneath it needs to be filled, so I do think that we drop down towards the $3.90 level. If a break down below there, then we will more than likely go looking towards the $3.50 level, which is significant support. If we break down below there, then we start looking towards the $3.00 level underneath which is the “measured move” of the descending triangle above.

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