Christopher Lewis
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Natural Gas

Natural gas markets initially rally during the trading session on Thursday but gave back the gains just below the 50 day EMA to show signs of exhaustion. By doing so, the market is likely to continue seeing quite a bit of selling pressure, but we should also note that there is a bit of an uptrend line just below and of course the 200 day EMA. In fact, we are stuck between the 200 day EMA and the 50 day EMA indicators, which can cause a bit of a squeeze, so it will be interesting to see how this plays out.

NATGAS Video 02.04.21

If we do break above the 50 day EMA, then we could go as high as $2.80 before we see a lot of selling pressure again, but I would still simply look for signs of exhaustion to get short of. If we break down below the $2.50 level, that is going to open up the trapdoor for much lower pricing. I have no interest in trying to buy this market anytime soon, so therefore on simply looking for selling opportunities. That being said, Friday is Good Friday, so liquidity will be a major issue so I would not place a trade until Monday, once we break one of these levels that I previously mentioned.

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Nonetheless, with the warmer temperatures coming in the northern hemisphere, I think we will eventually break down and go looking towards the $2.25 level, followed by the $2.00 level over the longer term. Granted, we may get the occasional bounce, but I think that simply going to be another opportunity.

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