- The natural gas market displayed signs of resilience during Tuesday's trading session, as the 200-Day Exponential Moving Average continued to provide a foundation of support.
- Presently, the market finds itself within a consolidation range, hinting at the possibility of an impending move towards the upper boundary.
- If we manage to breach the top of the shooting star pattern from Friday, it could set the stage for a substantial ascent toward the $4.00 mark.
Conversely, a breakdown below the 200-Day EMA would bring the 50-Day EMA into focus as a potential support level, followed by the critical $3.00 threshold. Despite the potential for further upward momentum, it's important to acknowledge the inherent noise and volatility that characterizes the natural gas market.
Several factors contribute to the bullish sentiment in the natural gas market. First and foremost, the 200-Day EMA's presence lends support to the prevailing upward trajectory. Additionally, the cyclical nature of the market gains prominence as we approach the colder months in the northern hemisphere, driving up demand for heating. The cyclical trade is one that a lot of traders are aware of, so it should be a contributing factor as well.
Volatility Ahead
Beyond these factors, concerns surrounding natural gas supply in the European Union are exacerbating the situation. Russia's limited supply and disruptions in the pipeline network pose substantial challenges. Moreover, issues with natural gas production in Western Africa and the ongoing conflict in the Middle East further complicate the supply landscape. Disruptions to pipelines in the north Atlantic and northern Europe add another layer of complexity.
In light of these factors, it is plausible to anticipate an upward trajectory in natural gas prices. While breaking above the shooting star's high and approaching the $4.00 level seems likely in the near term, there is also potential for a longer-term ascent towards the $5.00 mark. Nevertheless, it's essential to remain mindful of periodic pullbacks along the way, offering opportunities for value-oriented traders to enter the market.
Ultimately, the natural gas market remains poised for further volatility and potential price appreciation. The presence of key EMAs, the cyclical demand patterns, and global supply concerns all contribute to the market's upward momentum. Traders should closely monitor developments and be prepared for short-term fluctuations while keeping an eye on the long-term growth potential. The best way I know to do this is to use ETFs such as UNG to keep leverage low. CFD markets are also a great way to ride this trend, as the futures contracts can be very expensive when you are wrong.
Ready to trade Natural Gas Forex? Here’s a list of some of the best commodities brokers to check out.