- Natural gas markets experienced a slight downturn during Monday's trading session, with the summer range continuing to influence price movements.
- The $2.00 level is being closely monitored by traders as potential support, while the 50-Day Exponential Moving Average (EMA) is acting as a resistance.
- Beyond this, the $3.00 level presents a significant resistance and is likely to serve as the upper boundary of the recent consolidation range.
- It's important to note that during the summer, natural gas markets typically remain subdued as demand for heating diminishes in the northern hemisphere.
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Given the short-term nature of the market, expect continued volatility on shorter-term charts. While a sudden heat wave could trigger temporary spikes in demand, they are unlikely to be sustained. A break above the $3.00 level would be a bullish signal, albeit with limited longevity during summer. However, as the year progresses, Russian natural gas supply unavailability for the European Union could exert upward pressure on prices. The need for replenishment by European countries is expected to strengthen the market. Consequently, this presents a potential opportunity for upward movement later in the year. Natural gas is anticipated to become a favorable trade to the upside, particularly as winter approaches. Currently, though, the market appears trapped within a narrow range.
The Markets Remain in a Tight Range
A range-bound trading system can take advantage of small price movements if you engage in short-term trading. However, it is advisable not to allocate significant capital to this market. With patience, you can periodically withdraw profits that will serve as a base for returns until the end of the year. Eventually, the market will gain momentum and may even attempt to reach $5 per unit. Conversely, should the market break below the $2.00 level, a decline toward the $1.80 level becomes plausible, considering a support range in that vicinity.
Ultimately, the natural gas market currently operates within a summer range, facing resistance at the $3.00 level and potential support at $2.00. Short-term traders can utilize range-bound trading systems for small gains. However, caution should be exercised, and larger investments should be avoided. As the year progresses, factors such as limited Russian natural gas supply for the European Union could increase prices. Patience may be rewarded, as the market may eventually experience an uptrend, reaching $5 per unit. However, for now, the market remains confined within a tight range, with the possibility of a decline toward the $1.80 level if the $2.00 support is breached.
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