- The natural gas market displayed limited activity during Friday's trading session, hovering in close proximity to the 50-Day Exponential Moving Average.
- The 50-day EMA holds particular significance, as it often serves as an indicator determining the short-term trend. Notably, over the past few months, the 50-day EMA has shown a gradual upward trajectory, indicative of an accumulation phase for natural gas.
- This accumulation aims to bolster natural gas reserves in preparation for the impending winter demand.
Examining the chart, it's evident that the market faces substantial resistance near the $3.00 level. A decisive break above this threshold could trigger a rush of FOMO trading activity. Beyond this point, the 200-day EMA enters the picture, followed by a target of $5.00, which seems attainable at some point during the winter season. However, it's essential to exercise prudence regarding position sizing, given that this market tends to move at its own pace. Accumulation over the past month underscores that this is primarily an investment-oriented approach. After all, we don’t really know when this breakout occurs, just that it typically does this time of year.
Beneath the current price action, the $2.50 level has provided support over the last couple of months. Even in the event of a breakdown below this level, there appears to be additional support around the $2.00 mark. Consequently, shorting this market seems unwarranted, especially considering the leverage involved in futures markets. The strategy here is to maintain a long position, capitalizing on the anticipation of a substantial move.
Avoid Shorting the Market
In the grand scheme of things, it's reasonable to expect continued choppiness in the natural gas market. For those with the ability, to accumulate shares in an ETF is a prudent approach. Alternatively, trading the CFD market offers another avenue for participation. Holding onto the position aligns with the anticipation of a significant breakout. If the analysis aligns with market movements, the potential for doubling one's investment exists. Importantly, this approach allows investors to earn while they wait, a characteristic often associated with long-term investment strategies.
All factors considered; the current outlook does not support shorting this market in the foreseeable future. Instead, the focus remains on patiently awaiting and capitalizing on the impending breakout. The accumulation phase and the potential for substantial gains keep the investment thesis intact, while prudence and strategy guide the approach in this dynamic natural gas market.
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