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Natural Gas Price Forecast – Natural Gas Continues to Rally

By:
Christopher Lewis
Updated: May 20, 2024, 14:27 GMT+00:00

The natural gas markets rallied again in the early hours of Monday, as we continue to see a lot of tension propel the market higher.

In this article:

Natural Gas Technical Analysis

Taking a look at the natural gas markets, we are clearly overbought at this point. And if you’ve been following me, you know, I’m already long in this market. I did, in full disclosure, take some profits down in this area. But what I do see is a market that sooner or later, we will probably have a significant pullback. And at that point in time, I’m more than willing to get involved and look for some type of value play. You can see that the relative strength index is well above the 70 level. So, I do think it is coming. Whether or not it happens today or tomorrow, I don’t know. And, and that’s part of the problem. That’s part of the catch when you’re playing a market that is suddenly taking off like this.

We did initially build a base in an area where there were a lot of traders out there willing to get involved and play the long game where drillers eventually don’t make money at those prices and supply will get destroyed. There are a lot of geopolitical tensions in the Middle East as well, so it all lined up quite nicely.

I suspect we’re getting to the end of the initial part of this move, whether or not we pull back and then take it off again remains to be seen. That’s what I suspect in my experience, but it’s not an easy trade to take. So that’s why I look at my position more or less as an investment. And I do this through an ETF in the United States called UNG that doesn’t offer leverage.

So therefore, I’ve basically doubled my money here. It would have been a lot more explosive with leverage, but it also could have been a lot more damaging to my account and you know, that’s just the trade off when you trade a very volatile asset like natural gas. Historically speaking, we’re not in a hugely strong time of year. So that’s another thing to keep in mind, but it does look like we had built a base for a longer term bottom.

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About the Author

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.

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