- The natural gas markets experienced a slight rally during Tuesday's trading session, albeit with limited activity due to Independence Day in the United States.
- It was expected to witness some noise in the market on such a holiday. Notably, the 50-Day Exponential Moving Average has emerged as a crucial dynamic support level, gaining significance recently.
- Furthermore, prominent traders are gradually accumulating larger positions, anticipating a substantial price movement in the future.
Considering the prevailing circumstances, European nations will face challenges in replenishing their natural gas storage during the upcoming winter. Consequently, this could drive prices higher. With Russia no longer supplying natural gas to Europe, they must seek liquefied natural gas (LNG) from the United States. This shift in demand is likely to contribute to the upward trajectory of natural gas contracts. In the meantime, the market is consolidating between the levels of $2.00 below and $3.00 above. While this consolidation may lead to some volatility, given sufficient time, a breakout to the upside is expected. If the $3.00 level is surpassed, there is a possibility of a significant upward move toward the 200-Day EMA.
The Outlook Remains Positive
On the downside, the $2.00 level has proven to be a strong support level in the market and is expected to continue serving as such. Any breakdown below this level could potentially result in a move toward the $1.80 mark, but thus far, such a scenario has not materialized. It is reasonable to assume that the market has already hit its lowest point, so buyers are inclined to enter the market. Looking ahead, buying opportunities during market dips are anticipated. In the long run, natural gas is expected to attract traders seeking value, leading to potentially significant gains over the coming months while awaiting a major breakout.
In summary, despite the limited trading activity on Independence Day, the natural gas markets exhibited resilience and a modest rally. The 50-Day EMA provided dynamic support, indicating its growing importance. The shift in Europe's natural gas supply from Russia to the United States is expected to increase prices. In the near term, the market appears to be consolidating, but an upside breakout is likely. The $2.00 level has served as a robust floor, and a breakdown below it may lead to a decline toward $1.80. Nonetheless, the overall outlook remains positive, with buyers looking to seize opportunities and capitalize on long-term potential gains.
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