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The $3.50 level is backed up by not only the psychology of it being a large round psychologically important figure, but also a trend line and, of course, the 200-day EMA sitting just below there. Ultimately, I don’t like the idea of buying natural gas. And if we do rally from here, I’ll be paying close attention to the 50 day EMA, somewhere closer to the $3.90 level, and I will see if there are any signs of exhaustion in that region. That being said, I do think you need to be very cautious.
I think you need to recognize that natural gas is extraordinarily volatile and it’s a little bit different this time around as we head into spring due to the situation with the EU needing gas from Russia or the United States, we’re not sure where it’s coming from yet. And therefore, it is going to continue to be very noisy, but I do think that given enough time, we should see sellers come in and overwhelm this market as it gets a little extended. So being very patient and shorting on signs of exhaustion will be the way I look at this market going forward.
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