Natural Gas Technical Analysis
The natural gas market did initially try to gap down and fall apart, only to turn around and show signs of life. I do believe that the $4 level is a major barrier, so it’ll be interesting to see how that ends up being perceived by the market. We have recently formed a bit of a double top, and despite the fact that we have seen a little bit of positiveness after the open, I still think this ends up being a sell-on-the-rally type of scenario.
The one thing that does lift natural gas at this point is the fact that the Ukraine war is going to get worse, not better apparently. And if that’s going to be the case, that could have a major influence on Russian natural gas coming into Europe. And that means the Europeans may come to America for their gas. That has been the case recently, but in general, I think we’ve got a situation where you’re looking for signs of exhaustion to start shorting.
We don’t have it yet, but actually I’m already short of this market, but with a small position. I do think that eventually the warmer temperatures in the United States come to the focus and therefore send prices down right around that cyclical trade of shorting natural gas. It’s not uncommon to have one or two losses before having a big win. That’s been my experience over the last couple of years. And right now, right on track with that. So, I definitely don’t want to be buying natural gas right now. Weather is working against it and so will demand. So, we’ll have to wait and see how this plays out, but I am looking for signs of exhaustion to take advantage of it to add to an existing short position.
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