- The natural gas market experienced a slight dip in the early hours of Wednesday's trading session.
- However, it's crucial to bear in mind that the overall sentiment remains overwhelmingly bullish. Just the previous day, we witnessed a significant upward surge, prompting some traders to consider capitalizing on their profits.
- Beneath the market's current position, the 200-Day EMA acts as a reliable support level, and I anticipate it will continue to attract buyers during dips.
A noteworthy development is the imminent convergence of the 50-day EMA with the 200-day EMA, a technical pattern known as the "golden cross." This convergence indicates a strong likelihood that buyers will remain active in the market, contributing to its upward trajectory.
This time of year typically marks the onset of a robust rally in natural gas prices, driven by increased demand from the northern hemisphere as winter approaches. It is logical to expect traders to turn their attention to the natural gas market to enhance their portfolio returns. However, this year presents a unique situation, as Europe finds itself ill-equipped to meet its natural gas demands. Consequently, they will be heavily reliant on liquefied natural gas (LNG) imports from the United States, a factor directly influencing the natural gas futures contract.
Avoid Shorting the Market
Personally, I find the strategy of buying during price dips to be quite appealing, and I've been engaged in this approach for an extended period. I firmly believe that it's only a matter of time before we witness not only a breakout to new highs but also a move towards the $4.00 level. My longer-term target, set for the end of the winter season, is a price of $5.00.
Each time the market experiences a pullback, I diligently search for opportunities to augment my existing position, doing so in small increments. It's important to exercise caution in futures markets due to their inherent volatility. Nevertheless, I remain optimistic that this market will continue its upward trajectory, aligning with other markets such as CFD and ETF markets, which offer flexibility in adjusting position sizes.
In the end, shorting this market appears to be an unattractive prospect in the near term. Instead, it seems increasingly likely that patient buyers will ultimately reap the rewards of their conviction as the natural gas market continues its upward journey.
Potential signal: I am a buyer. Right here, right now. I have a stop at $3 below. I am aiming for $5. I do so with low leverage, to ride out the volatility.
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