- Natural gas markets have somewhat stabilized during the trading session on Thursday, near the $1.66 level.
- This is an area that’s just above the mass of $1.50 level, and I think a lot of people will be paying close attention to it.
- After all, this is a major low in the market and I think historically speaking, has been crucial for market participants to pay attention to.
That being said, this is a market that is very dangerous to try to come in and “pick the bottom” at the moment, but I do recognize that it is tempting. If you are a longer-term trader, then it’s possible because you can do things to mitigate some of your risk such as use options, or perhaps even using ETF like I do, in the United States we have one called UNG.
Long-term outlook
The long-term outlook for natural gas is probably strong, but right now we just have far too much in the way of supply to make it look like a market that anybody wants to be involved in. I think you’ve got a situation where traders will continue to try to take advantage of a longer-term “buy-and-hold” strategy, but short-term traders are going to continue to kick this thing around on the latest weather report. Keep in mind that we are close to the time of year where demand starts to drop significantly, and with all of the supply that obviously causes a lot of problems.
Ultimately, the 20-Day EMA above at the $1.82 level should be watched as a potential short-term ceiling. If we could take out the $2.00 level after that, then it would be a very bullish sign, but right now I would not hold my breath for that type of move because it would take a lot of effort to make that happen, although there is the outside possibility that we get a winter storm in America late in the season that could cause some type of short-term spike. Longer-term, it makes a great investment but for shorter-term traders, this is probably a market that you can’t be bothered with.
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