As the 50-Day EMA sits near the $2.68 level and continues to drop, it offers significant technical pressure.
- The natural gas market has had a volatile year, but it appears that it may have found a temporary bottom at the $2.00 level.
- The market has been trading within a range of $2.00 to $3.00, with the latter serving as a significant resistance level. In the short term, it seems likely that the market will rally a bit from the current oversold levels.
- However, traders should be cautious in their buying at this point due to the seasonal drop in demand for natural gas during warmer months.
As the 50-Day EMA sits near the $2.68 level and continues to drop, it offers significant technical pressure. If traders have a long-term view, then they should keep in mind the demand for natural gas is likely to drop as temperatures warm up, leading to lower prices. Additionally, if a global recession is imminent, demand for natural gas may drop further, leading to additional downward pressure on prices. This should continue to be the case for the foreseeable future, as the demand for natural gas is going to crater. This is going to be seen in multiple places, and therefore it is difficult to see the bullish case, beyond a short-term bounce, and it would be a short-term trade at best.
While natural gas may not be a strong buy in the short term, there may be opportunities to trade after a short-term rally shows signs of exhaustion. It is also worth keeping an eye on the European Union’s demand for natural gas during the winter months, as they do not have enough natural gas to get through the season. As a result, we could see significant pressure on the market down the road.
Natural gas markets can be notoriously difficult to trade due to their volatility, and traders should be cautious in their approach. While it is true that the market is likely to experience a lot of choppiness in the coming weeks, it’s important to remember that demand for natural gas could pick up in the future, creating opportunities for traders. At this point, however, it seems likely that the market will continue to experience short-term volatility and traders should be prepared for this. As always, the key is to monitor market conditions and adjust your strategy accordingly.