- The natural gas market has remained relatively flat during Friday's trading session, with the market continuing to hover around the $2.00 level.
- This is a critical level as it is a large, round, and psychologically significant figure that many traders are watching closely.
- The market is currently trying to establish its "summer range," which typically sees little activity unless there is a heat wave.
- As such, it is not uncommon to see natural gas trade between $2.00 and $3.00 during the warmer months.
It is important to note that industrial demand for natural gas will be weak if the market heads into a major recession, which many people are expecting. In such a scenario, there is a possibility that the market could break down below the $2.00 level. However, it is worth noting that the $1.80 level has previously provided support. Currently, this market is not suitable for buying, except for short-term trades.
Once the market settles into a range, it becomes a matter of going back and forth until it breaks out. The 50-Day EMA is at the $2.59 level, which has acted as a consolidation point in the past. Therefore, it is likely that the market will attempt to reach this level, but it may take a while to achieve it. Over the last few weeks, the market has seen a range of $0.25, making it more of a scalping environment than anything else. Making significant returns on trade may be challenging at this time.
Be Cautious
It is essential to keep in mind that by the end of summer, Europeans will need to refill their storage tanks with natural gas, which could lead to a significant spike in prices. This is something to keep an eye on and could present an opportunity worth considering.
Ultimately, the natural gas market is currently experiencing a period of stagnation, with the market hovering around the $2.00 level. Industrial demand for natural gas will be weak if the market heads into a major recession, and it is possible that the market could break down below the $2.00 level. The 50-Day EMA is at the $2.59 level, which is likely to act as a consolidation point. Making significant returns on trade may be challenging at this time, as the market is currently in a scalping environment. However, there may be opportunities to capitalize on a potential spike in prices at the end of summer. Traders need to remain informed, exercise caution, and be patient in the current market environment.
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