After all, temperatures are about to start dropping again, that is going to drive up demand for natural gas. Because of this, we have a situation where cyclical trade sets up for a bigger move. That being said, the market is likely to continue to see plenty of volatility, but at this point every time the market pulls back it’s likely that we will see buyers jumping into this market. The $3.00 level also offers a significant amount of support, as it is a large, round, psychologically significant figure, and of course an area that previously had been major resistance, so now that we have retested it, it does make a certain amount of sense that the market forces come back into the picture to support the market.
All things being equal, the natural gas markets continue to be very noisy, therefore it does make a certain amount of sense that we have the market making these sudden moves. All things being equal, I think you need to look at this as a value hunting proposition, and every time it dips it is a buying opportunity.
That being the case, I have been involved in this market for some time now, but I have been using the ETF market because I can control leverage and the amount of damage that pullbacks do. You can also use the CFD market, as long as you position size accordingly, and add incrementally instead of trying to jump “all in” into the market in one shot. The volatility alone in the natural gas markets make that difficult.
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