Natural Gas Price Forecast – Natural Gas Continues to See Base Building

Natural Gas Technical Analysis

Natural gas continues to meander around the bottom. The natural gas markets did very little during the trading session on Tuesday, as I think will be the case for quite some time. This is an investment and not a trade. Quite frankly, we are to the point where US drillers are going to walk away because if it gets much cheaper, they will lose money and there’s no point in going out and drilling to lose money.

The $1.50 level underneath is a major support level and I do think that we are bouncing around here trying to form a base. We will either get one last hurrah from winter, even though it’s spring. Those of us in the northeastern part of the United States can attest to that. Or it will be a situation where we get a heat wave in the middle of the year that causes prices to spike.

I am invested in an ETF because I know that later this will really start to rally and react to the fact that it is so cheap. The problem of course is you don’t know when that’s going to be. There’s no real catalyst for it, at least until we get colder temperatures later this year. So, I am building up a position, but it’s just part of my portfolio. If you’re going to trade this from a short-term perspective, good luck.

I really don’t know what to tell you because it’s essentially dead money at the moment. However, this is typically what is known as an accumulation phase. Volume will start to pick up slowly at first and big funds will start to buy larger positions. Eventually, demand picks back up and those who are considered to be smart money are far before the rest of you.

That’s the whole point here. This is an investment, but you must be willing to sit on it for a few months if that’s what it takes. You also have to be willing not to use leverage. Leverage is going to get you wrecked here, or I should say a lot of leverage. Maybe two or three times leverage would be fine, depending on your account size. At this point though, I’m just using a simple ETF like I said earlier and waiting for my investment to pay off.

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