Natural Gas Signal: Continues to Recover in Bounce

Although signs of exhaustion will be closely watched by most traders, it is not surprising to see a rebound after the recent sell-off. 

  • Natural gas markets rallied slightly during Friday's session, indicating a potential push toward the $3 level.
  • This price point has previously acted as resistance, making it reasonable to expect a retest.
  • Additionally, the psychological significance of the $3.00 level would attract significant attention from traders and investors.

Although signs of exhaustion will be closely watched by most traders, it is not surprising to see a rebound after the recent sell-off. The $3.00 level is likely to present a challenge, given its historical resistance and psychological impact.

Historically, natural gas tends to settle into a summer trading range, and the market appears to be approaching the upper end of this range once again. The $2.00 level below serves as a significant support level and acknowledging it as a potential bottom makes sense. In the event of a breakdown below $2.00, downside potential may be limited, as previous trading patterns suggest a support zone extending down to the $1.80 level. With this, I am very interested in shorting to aim for that level but would like to see $3.00 tested first.

Traders Should Monitor the Market

Traders should consider natural gas for potential short opportunities, but it is crucial to align their strategy with price action. Short-term traders who took advantage of the recent upward movement likely fared well. However, it is worth noting that a move towards the $3.00 level would represent a 50% increase, which could be considered overdone. After all, this is not the time of year that most people suddenly become bullish on natural gas, unless there is some kind of heat wave. However, this area could be important for building positions for those looking for a move in the fall.

In conclusion, natural gas markets have experienced a slight rally toward the $3 level, a significant resistance zone. Traders should closely monitor this level due to its historical and psychological importance. As natural gas typically settles into a summer trading range, reaching the upper boundary is expected. The $2.00 support level holds significance, and breaking below it may encounter limited downside potential. Traders considering short opportunities should exercise caution and align their strategy with price action. Monitoring key levels and market dynamics will be crucial in navigating potential trading opportunities in the natural gas market.

Potential signal: I am a big fan of shorting this rally. I would short if we get close to $3, with a potential stop at $3.10, and a target of $2.20.

Natural GasReady to trade our daily Forex signals? Here’s a list of some of the top 10 forex brokers in the world to check out.

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.