Natural gas markets pulled back a bit during the trading session on Tuesday, showing signs of support just below at the $2.75 level. That’s an area that has caused significant support more than once so it makes sense that we continue to see a lot of noise in this area.
Natural gas markets pulled back a bit during the trading session on Tuesday, reaching down towards the $2.75 level. That’s an area that the buyers have been very stringent about, and I think at this point it’s likely that we will continue to see a lot of volatility, but I do think that the $2.75 will be a bit of a “floor” in the interim. I think the best way to trade this market is the best way that we have seen for some time: simply selling signs of exhaustion at higher levels. Ultimately, I think that the $3 level will cause significant resistance, just as the $3.25 level will. I think ultimately we are looking at a market that continues to have selling pressure above based upon the oversupply of natural gas in the United States and Canada that can do more than just fuel those countries, but the entire world for centuries.
Ultimately, this is a market that has a significant pop occasionally, but that’s typically due to fluctuations for the short term in weather. We have already seen a bit of a pop due to the cold snap in the United States play out, and then get sold off near $3.25. Ultimately, we will probably get another rally that gets sold off yet again. If we were to break down below the $2.75 level, we could go down to the $2.50 level underneath which should be even more supportive based upon longer-term charts.
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.