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Christopher Lewis
Commodities

Natural gas markets initially rallied during the trading session on Wednesday, reaching towards the 50 a.m. before we rolled over and broke lower. At this point, the $2.60 level should be support, but if we can break down below there I think that the natural gas markets will continue to show the negativity that could send this market down to the $2.50 level. That has been the “floor” in the market and should continue to be so. That being said, we have made a “higher high”, so it’s possible that the market could continue to grind higher but that should only end up being a nice selling opportunity.

NATGAS Video 16.05.19

The 200 day EMA is just above the $2.70 level, which is also an area that I’d be interested in shorting at. The seasonality simply doesn’t work out in favor of natural gas, so as a result I typically don’t buy the contract until November. That’s not to say it can’t be done, it’s just that it seems that move slower tend to move a bit quicker than moves higher, and therefore you can mitigate some of your risk as you are not in the market as long to pick up your profit.

If we did break down below the $2.50 level, that opens the door to the $2.25 level, but at this point I don’t think it’s going to happen in the short term. However, if it does you should stand up and take notice.

Please let us know what you think in the comments below

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