Natural Gas Markets Pull Back to Reach 50 Day EMA

Natural gas markets have pulled back a bit during the trading session on Tuesday as we continue to see a bit of hesitation. At this point, you can make out a miniature head and shoulders pattern possibly, but I think the most important technical thing to pay attention to here is the 50 Day EMA because it has been a rather significant dynamic support as of late.

NATGAS Video 16.03.22

On the upside, I see the $5.00 level as being problematic, and I do not know that we are going to be old to break above there anytime soon. After all, it is a large, round, psychologically significant figure, and an area that we have seen selling from previously. Beyond that, warmer temperatures are coming soon, and that will drive down demand for natural gas. Because of this, it is very likely that we will eventually break through the 50 Day EMA and go looking towards the 200 Day EMA at the $4.20 level.

This is a market that has been very noisy as of late, and I think a lot of this comes down to the headlines coming out of Ukraine. Longer-term though, whether or not the Americans start supplying LNG to the European Union will be a potential question. However, demand is going to drop in the short term regardless of that situation, so I think this is a market that you still have to be looking to short whenever you get an opportunity.

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