Christopher Lewis
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Natural Gas

Natural gas markets have fallen a bit during the course of the trading session on Thursday to test the 50 day EMA. Having said that, the market has formed a slightly positive candlestick but at this point time I think it is only a matter of time before sellers will jump back in. After all, even though we have colder than usual temperatures in the United States, sooner or later that does end. Once it does, the price of natural gas will certainly plummet as we have less demand for that commodity.

NATGAS Video 23.04.21

If we break down below the lows of the last couple of days, and essentially the 50 day EMA, it is likely that the market goes down towards the 200 day EMA near the $2.58 level. Because of this, the market is likely to see a bit of a “trapdoor effect” as the momentum would pick up to the downside. Quite frankly, even if we do rally from here, I am simply looking for an opportunity to short this market. The market will start to price in the idea of warmer temperatures, as we had started to see later in February.

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At this point time, the market is likely to see a lot of volatility, but quite frankly the longer-term outlook for natural gas is still lower, even though we are starting to see even the ugliest commodities get a little bit of a bid. Eventually though, fundamentals do come back into play, pushing this market much lower over the longer term, perhaps reaching towards the $2.00 level by the end of summer.

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