- Natural gas has exhibited a rather erratic pattern recently, initially declining but subsequently displaying signs of resurgence.
- The market appears to be fluctuating around the 50-day Exponential Moving Average.
- However, it remains challenging to adopt an overly bullish stance, primarily due to the disappointing winter season thus far.
The market's performance has failed to meet expectations, and traders have been cautious not to get burnt by its unpredictability. Although the current outlook appears somewhat positive, it's important to consider that the futures market is already pricing in February, implying that the winter season is drawing to a close in terms of futures trading.
In this context, the $2.50 level underneath is viewed as a significant support level. A breakdown below this level could potentially open the door to a decline toward $2.25. Conversely, surpassing the high point of the Tuesday session's candlestick could pave the way for a move toward the $2.88 level.
Trading in a Range?
Currently, the market appears to be trading within a range that aligns with fair value, based on historical momentum in both upward and downward directions. The market will likely attempt to establish a range to navigate through the remainder of winter. However, it's worth noting that a sudden cold snap could exert bullish pressure on the market. Nevertheless, the market has been grappling with an oversupply of natural gas, making it challenging to sustain any significant price movements.
It is essential to keep in mind that natural gas is inherently highly volatile, even under normal conditions. Given the current circumstances, prudent position sizing becomes even more critical. While the possibility of an upside exists, flexibility and agility in positioning are paramount.
In the end, natural gas has shown a fluctuating pattern, initially declining but later rebounding around the 50-day EMA. Overly bullish sentiment is difficult to justify due to the underwhelming winter season. The $2.50 support level holds significance, with the potential for a decline to $2.25 if breached. Conversely, surpassing the Tuesday session's high point could lead to a move toward $2.88. The market is currently in a range that reflects fair value, considering historical momentum. A sudden cold snap could introduce bullish pressure, but the market has been plagued by oversupply issues. Natural gas's inherent volatility underscores the importance of cautious position sizing, particularly in the prevailing market conditions. Flexibility in positioning remains key.
Ready to trade FX Natural Gas? We’ve shortlisted the best commodity brokers in the industry for you.