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Natural Gas Forecast: Is It Establishing a Base? Maybe

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

Natural gas may be forming a base at extreme lows. Caution warranted. $1.50 level crucial support. Momentum possible above $2. Selling pressure likely easing. Stability key for long-term swing trade.

  • Could it be that natural gas is at last creating a foundation?
  • That is yet to be determined, but you can surely make the case on the idea that we are at such extreme lows, and it seems like we are continuing to see people will to pick it up.
  • However, caution will be needed obviously.

Natural Gas Forecast Today 27/02 - Is it establishing a base? (Chart)

We are so oversold that it appears like we are trying to build up a base because eventually someone is going to jump in and buy this. As you can see, the market will continue to see a lot of noise in this area, and I do think it makes some sense.

Remember that drillers will withdraw from the natural gas markets and cease to provide because, quite simply, it is not financially advantageous to do so. I think the $1.50 level below remains a significant support level, therefore you should be extremely aware of it. There might be some momentum if we can break above the $2 mark.

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The $2 Level

However, the $2 level is actually a circumstance where it may act as a bit of a ceiling at this time. As things stand right now, I believe that market players will either run this back up or go sideways. Selling is, I believe, almost complete. Almost no more work is left to be done before natural gas is completely free. Naturally, you cannot have that; the $1.50 level from 2020 is a hard floor. I believe that at this point, we are attempting to determine whether or not we can stabilize. And should we, this may make for a pleasant long-term swing trade. Of course, the catch is that you have to perform it with a posture and tool that let you perform it lightly enough not to injure yourself. ETFs, potentially a CFD, and possibly futures markets will be challenging due to the margin requirements, contract size, etc.

I know you might just as easily disregard it, but right now I don't want to short natural gas. When trading an instrument, it all boils down to how patient you are. However, at the moment, natural gas does not appear to be in a rush to go too aggressively upward, so have that in mind. Swing traders, however, might find this setup appealing.

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Christopher Lewis
About Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
 

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