- Natural gas markets have fallen during the trading session, albeit very slowly and without much fanfare on Thursday.
- Ultimately, we continue to look at the $2.00 level as an area of importance, so therefore we need to pay close attention to the idea of whether we will see this hold, or if we break down to the $1.80 level.
- The $1.80 level has also been important in the past, so would not be a huge surprise to see the market reach down to that general region.
On the upside, if we do turn around a breakout to the upside it’s quite a bit of noise to deal with. The $2.15 level has been slightly resistant as of late, but then after that, we also have the 50-Day EMA, currently trading right around the $2.60 level. Anything above there then must deal with the $3.00 level, which in and of itself has a lot of psychology attached to it. Furthermore, the $3.00 level previously had been significant resistance, so I just don’t see where we have an argument for trying to break above there anytime soon.
Keep in mind that we are heading into a typically warm part of the year, and therefore it’s typically weak for this market. We have already seen the market completely collapse this year, so it’s difficult to imagine that we are going to see another massive leg lower. What I anticipate is that we will continue to consolidate in this area, as natural gas has essentially become “dead money.” Ultimately, I think that down the road later this year we will have buyers coming back into the market, perhaps trying to push it toward that $3.00 level. Keep in mind that the Europeans will have to replenish their natural gas supplies, and therefore it could cause a bit of pressure on the market, but that’s probably several months down the road. In the meantime, if you are a short-term scalper, this might be the trade for you, but it remains to be seen whether it plays out that way. Momentum is certainly not present in the market at this point.
Natural Gas Has Been Consolidating for Some Time
While there is some resistance at the $2.15 level, the bigger challenge for natural gas will be breaking through the 50-Day EMA at $2.60 and the psychological barrier at $3.00. However, given that we are heading into a typically warm part of the year, it's unlikely that we will see any significant movement beyond consolidation in this area.
For short-term scalpers, there may be some opportunities in the market, but it's important to be aware of the lack of momentum. Natural gas has been consolidating for some time, and there are no indications that this trend will change soon.
Overall, while the natural gas market has been slow and uneventful in recent trading sessions, it's important to pay attention to the key support and resistance levels. While there may be some short-term opportunities, the lack of momentum and seasonal trends suggest that the market is.
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