Natural Gas Technical Analysis
The natural gas market initially tried to break above the $3 level only to turn around and start selling off again on Monday. Now, having said that, you should keep in mind that Monday, of course, was Labor Day in the United States. So, it makes a certain amount of sense that the markets can’t be trusted. But it did turn around at the exact spot that we were watching at the $3 level.
The 50 day EMA sits at the $3.09 level. So, it does make a certain amount of sense that we might see some trouble in the general vicinity. We recently gapped, but it’s not a real gap. It’s a rollover into the September contract. Because of this, you have to look at this through the prism of a market that perhaps has another leg lower before we start to focus on cooler temperatures. It’s worth noting that it’s not very hot in America right now. So therefore, there won’t be a lot of demand for electricity for air conditioning or anything like that.
So, with that being said, the market is likely to continue to look at this as an oversupplied market. In the next few months, we will start to talk about winter, and we will get our pop higher. But right now, we just don’t have it. It would not surprise me at all to drop back to the lows or, at the very least, go looking to fill the gap underneath. Anything below there could open up a move to the $2.50 level, where I think you’ll see a lot of support as well. I have no interest whatsoever in buying natural gas at the moment.
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