FXEMPIRE
All
Ad
Advertisement
Advertisement
Christopher Lewis
Add to Bookmarks
Natural Gas

Natural gas markets initially shot higher during the trading session on Friday but continue to see the $3.00 level as a very difficult barrier to break above. That being said, it does make sense that we would struggle there, because quite frankly the large, round, psychologically significant figure will come into play, and therefore I think will continue to sell off every time we try to break above it. If we can break down below the lows of the week, I think that then opens up a potential move down to the gap underneath.

NATGAS Video 17.05.21

Remember, gaps do tend to get filled given enough time in the futures market, and I think that is the play that we have setting up here. That could send this market all the way down to the $2.70 level, which would fulfill a lot of technical analysis setups. Furthermore, I think we even go down below there to reach down towards the bottom of the overall range, maybe down to the $2.40 level. With that being the case, the market certainly has much more downside risk than up, especially as temperatures pick up in both the United States and Europe.

Advertisement
Know where Natural Gas is headed? Take advantage now with 

Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

There is fairly significant foreign demand for LNG, but at the end of the day the biggest driver of natural gas is going to be heating and cooling in the US, Canada, and the EU. With this, as we head into warmer temperatures will obviously see less demand in the short term. This is a cyclical trade that I take every year, and although there is more of a “reflation trade” going on, at the end of the day natural gas will be the first commodity to fall apart.

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

Advertisement
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker