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Christopher Lewis
Natural Gas

Natural gas markets have gone back and forth during the trading session on Thursday, as we continue to hug a minor trendline. This is an area that will be interesting because it is being squeezed by both trendline and the 50 day EMA. Because of this, I think we will get a lot of choppy and volatile trading, but ultimately, I think we are setting up for more of a grind higher based upon the reaction that we had during the Wednesday session. Granted, anything is possible and most clearly, we are in a longer term downtrend. However, I think we are more likely going to see the market bounce around and then eventually find buyers due to the idea of the economy reopening.

NATGAS Video 12.06.20

I am not a huge fan of natural gas, but I recognize that we are trying to form a “rounded bottom”, which is a longer-term trend reversal signal. Whether or not we can take off to the upside for a longer-term move is completely up for debate at the moment, but I think a return to the two dollars level is more likely than not. The various natural gas companies around the United States that are going bankrupt will help the supply situation, but I do not know how much demand there truly is. Furthermore, as soon as natural gas markets reach a decent price, you can guarantee that those companies will reappear in one form or another. In other words, this could be a relief rally that will eventually get squashed from a structural perspective.

For a look at all of today’s economic events, check out our economic calendar.

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