Natural Gas Technical Analysis
The natural gas market has dropped again during the trading session on Monday, as we just cannot find our footing. This does make a certain amount of sense due to the fact that we are heading into a time of year that’s traditionally pretty weak. And of course, a time of year that as temperatures moderate, the heating drops, but also the demand for electricity may be dropping if we continue to see a slowing U.S. economy. Whether or not that actually ends up being the case remains to be seen, but as things stand right now, this is a market that I believe is probably reaching towards the $3 level.
Keep in mind that natural gas does have a certain amount of cyclicality to it. So, none of this would be surprising to me. Quite frankly, the biggest surprise that I have seen was that we didn’t fall like this quicker. With this, I think you have to look at this as a market that is now below the 200 day EMA. And I think ultimately this is an area where I would be looking for signs of exhaustion to short again. The $3.50 level is a major resistance barrier as it dissects a major uptrend line as well. If we break down below the $3 level, then the market really starts to fall apart. I have no interest in buying natural gas whatsoever during this kind of market action and time of year.
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