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Natural Gas Price Forecast – Natural Gas Markets Continue to Pull Back

By:
Christopher Lewis
Published: Mar 5, 2024, 14:29 UTC

Natural gas markets have pulled back during the early hours on Tuesday as we continue to look at the $2.00 level as a major resistance barrier, as it previously had been so important for support in a phenomenon presenting itself as “market memory.”

In this article:

Natural Gas Technical Analysis

Taking a look at the natural gas markets and it looks to me like the markets are pulling back a bit from the 20-day EMA but perhaps more importantly, they are pulling back from the $2 level. The $2 level of course is an area that a lot of people will pay close attention to and it is a psychological area that traders as important not only due to the large figure, but the fact that in the past it had been significant support.

So, I do think you have a situation where market participants will continue to look at this through the prism of market memory. If we can break above the $2 level, then I think natural gas has a real shot at breaking out for a much bigger move. I don’t necessarily know if that’s going to be the case, but I do recognize that we have a scenario that traders will continue to look at current pricing as extraordinarily low from a historical standpoint. And of course, you do have to ask the question sooner or later whether or not drillers will just simply step away from the fields. After all, nobody wants to drill for natural gas and lose money. At the end of the day, I think that if we can break above the 50-day EMA, we could go look into the $2.50 level.

Longer term, this is a great swing trade, but you have to be able to handle the volatility. And the only way I know how to do that is to simply take the leverage out, perhaps an ETF or something to that effect, or a small CFD position might be the way to go. You don’t want to be highly levered in the natural gas markets right now. This could go sideways for the rest of the summer, which would make a certain amount of sense from a historical perspective as demand tends to drop overall. However, at this point we just don’t know whether or not that’s going to be the case.

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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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