Natural gas markets experienced a slight rally during Monday's trading session, with the 50-Day Exponential Moving Average acting as a potential support level. The market appears determined to bounce higher, primarily driven by concerns over the availability of Russian gas in the European Union during the upcoming winter season. As a result, demand for liquefied natural gas from the United States is expected to surge, which significantly impacts the natural gas contract, closely tied to distribution from Henry, Louisiana.
The next significant barrier for the market lies at the $3.00 level. A successful breach of this level could offer an opportunity for a breakout. However, whether or not this breakout occurs in the short term remains uncertain. Nonetheless, there is a notable amount of position building underway, evident from the substantial volume accumulation in the ETF market. This suggests that larger traders are increasingly betting on the potential rise of natural gas later this year.
It is important to recognize that the market remains within a range-bound state, which warrants caution. However, if the $3.00 level is surpassed, there is a high likelihood of the market targeting the 200-Day EMA, currently around the $3.60 level. In the event of a pullback, strong support is anticipated beneath the market. Furthermore, the $2.00 level has proven to be crucial on multiple occasions in the past, representing a psychologically significant figure that attracts significant attention. Buying on dips and patiently waiting for a potential breakout in the future appears to be the most prudent approach.
Natural gas markets witnessed a modest rally during Monday's trading session, finding support from the 50-Day EMA. Concerns over the availability of Russian gas in the European Union during the upcoming winter season have driven market sentiment. This expected shortage is likely to increase demand for liquefied natural gas from the United States, directly impacting the natural gas contract tied to distribution from Henry, Louisiana. The $3.00 level serves as a significant barrier, with a breakout offering potential upside. Nonetheless, the market remains range-bound, requiring careful consideration. A breakout above $3.00 could propel the market towards the 200-Day EMA near $3.60. In case of a pullback, substantial support is expected, particularly around the psychologically important $2.00 level. Investors are advised to adopt a strategy of buying on dips and patiently await a potential breakout.
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