Natural gas markets have recovered quite nicely during the course of the week, as we are now threatening the $5.50 level.
Natural gas markets have initially fallen during the trading week but has turned around to show signs of life again. It now looks as if the $4.75 region is significant support, as it looks like we are continuing to see a lot of volatility and buying pressure in that area. It makes sense, this is the January contract which of course is a cold weather month, meaning that the markets will start to price in the idea of even more demand. That being said, we have been in an uptrend for a while, so it looks like we probably are getting ready to continue.
However, keep in mind that the market is likely to see a lot of noisy behavior and of course a lot of risk once you get closer to the $6.00 level. The market has the specter of spring coming soon, so I think we may have one more last pop to the upside coming, and then at that point in time we could see a little bit of a pullback. In general, this is a market that continues to see a lot of noise, but in the short term I think it is a “buy on the dips” scenario, unless of course we close below the $4.75 level.
The candlestick of course is very bullish looking, and of course the inverted hammer from the previous week being broken to the upside could bring in fresh buyers, but again, I think that it is very possible that the $6.50 level above might be the highs for this season. That has been a very impressive move, but I also recognize that the breakdown might be just as impressive.
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Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.