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Natural Gas Technical Analysis
Natural gas markets have pulled back just a bit during the course of the trading session on Monday, but it looks at this point in time we will see the $3.00 level underneath offer support. The 50-Day EMA is approaching that level as well, and it’s an area we recently had seen a lot of pressure. Because of this, it’s probably only a matter of time before market memory comes in and picks this market up.
Ultimately, this is a market that is trading between the 200-Day EMA and the 50-Day EMA indicators, and that of course typically causes a lot of noise. Because of this, we will more likely than not see technical support come into the picture, and of course we have plenty of fundamental reasons to keep this market alive. Ultimately, the European Union has to worry about gas this winter, and that has of course a long reaching effect on the market. I do think that we are in the midst of recovery for the cycle, and that natural gas should go much higher.
Above, I see the $4.00 level as a major resistance barrier, and therefore it ends up making itself a nice target. If we can break above there, then the market is likely to look into the $5.00 level after that. The $5.00 level is my longer-term target but given enough time we could even go higher than that. Regardless, this time of year I don’t like selling natural gas as there is so much in the way of demand coming around due to cooler temperatures. With this, I like the idea of buying dips, and have been adding to a position every time it does pull back. That will be no different today, as I will buy a few more shares in my favorite natural gas ETF.
As far as using a levered position, natural gas is not really a retail market, despite what your broker offers. The reality is that natural gas moves mainly due to predictive weather patterns, and news events in the United States, although foreign demand can come into the picture as well.
For a look at all of today’s economic events, check out our economic calendar.
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