Natural Gas Technical Analysis
The natural gas markets have drifted a little bit lower during the trading session on Friday in the early hours as we continue to see a lot of questions asked about demand and, of course, temperatures. The temperatures in the United States are warming up, although they’re pulling back a little bit right now, so that is going to be the overreaching major reason natural gas moves. It’s going to be a simple lack of demand. Over the winter, we had seen a massive amount of natural gas taken out of storage, and now we’re getting to the point where we are starting to refill that storage.
The market is currently sitting at the 50 day EMA and if we can break down below there, then it’s likely that the market will go down to the $3.50 level. Any rally at this point in time will more likely than not see a lot of resistance above the $4 level, extending all the way to the $4.25 level. I have no interest in buying natural gas and I am looking to take the cyclical trade of shorting natural gas as it loses most of its demand. In fact, the time frame between March and July, maybe August, tends to be very weak for natural gas.
Although this last winter was enough to at least keep it elevated for the time being. I am looking to short this underneath the candlestick right now, but again, I would keep that position small. Natural gas does tend to jump around at the latest headlines a lot more than many other commodity markets.
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