- Over the course of the week, the natural gas market has displayed a lack of significant movement, following last week's breakthrough above the 200-Day EMA.
- This technical indicator holds considerable weight among traders and investors, which explains the observed support.
- In essence, the market is poised for continued back-and-forth trading, and it's crucial to consider this in terms of accumulation. In the grand scheme, the $3.00 level remains of paramount importance, given its status as a substantial, round, and psychologically significant benchmark.
Moreover, the 50-day EMA is poised to provide support around the $3.00 level. Consequently, it's reasonable to expect that buyers will enter the market over time. Personally, I see opportunities for buying the dips, as natural gas continues to benefit from various tailwinds. Consequently, I believe we maintain a "buy on the dips" approach. While a drop below the 50-day EMA would be somewhat unexpected, I anticipate that, given sufficient time, we may target the $4.00 level, and potentially even the $5.00 level.
Looking to Buy on the Dips
It's important to note that the European Union faces the challenge of securing natural gas supplies during the upcoming winter season, having lost a significant portion of its supply. This situation has introduced a flurry of headlines regarding damaged gas lines, with the recent disruption of the pipeline between Estonia and Finland raising concerns. Both the Nordstream II and the Estonia-Finland pipeline disruptions have been labeled as acts of sabotage. As temperatures drop, the demand for natural gas is expected to rise, adding further bullish sentiment to the market. As such, I've been bullish on natural gas and have been pursuing long positions, with no inclination to short the market. Whenever there's a pullback, it represents a buying opportunity.
At the end of the day, the natural gas market exhibited stable trading activity, supported by technical indicators and prevailing market dynamics. The $3.00 level remains a focal point, with the 50-day EMA poised to offer reinforcement. The European Union's challenges in securing winter natural gas supplies have added to the market's bullish sentiment. Consequently, the "buy on the dips" approach appears to be a prudent strategy in this environment, with the potential for higher price targets in the future.
I would point out that I don’t have massive, leveraged positions in this market. I use ETFs to gain exposure and look at this market as an investment.
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