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Natural Gas Technical Analysis

Natural gas markets have gapped lower to kick off the trading session on Monday, which of course is a very negative sign. That being said, the market is likely to continue to see the overall consolidation to make a run toward the bottom. That being said, there’s a massive amount of support underneath here and of course the cyclical trade will continue to support natural gas rallying over the longer term. Quite frankly, there are far too many things out there working against supply of natural gas this winter to think that we won’t get the occasional shot higher, which typically leads to a cyclical trade to the upside.

That being said, it’s not without its dangers, and of course you have to be cautious with your position sizing. Because of this, I have not been using levered positions, which quite frankly retail traders have no business doing when it comes to this market anyway, as natural gas is typically in its own world, driven by seasonal factors, geopolitical concerns, and of course whether.

Predicting the weather is a big enough problem, but when you throw in situations like Russian gas not being part of the European markets, that causes a major problem. Part of the reason we may have fallen could be due to the fact that warmer temperatures are coming to the United States next week, which brings up another point as to why this is not a retail market: it’s a highly volatile short-term focused market most of the time.

Unless you understand weather patterns in the United States, because most natural gas pricing is based on US natural gas, you don’t really have a real shot at this from a longer-term standpoint. That being said, it is cheap at the moment, and it does look attractive to add to an already long position that I have in the ETF UNG, but if you don’t have access to that, you can start to use CFD positions, because you can tailor them to the appropriate size to keep the market from being overly dangerous. Above, we have the 200-Day EMA that looks likely to cause major resistance, so pay close attention to that as well.

For a look at all of today’s economic events, check out our economic calendar.

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