- The natural gas markets have been pretty wild during the trading session on Monday, gaining 10% as I record this after a gap in higher, most of this due to the trade war flaring up between the United States and Canada.
- That being said, I look at this as a great opportunity to short natural gas.
- I want to see how we behave near the $3.50 level if we do in fact reach it. If we can break above there, then I think we have a real shot at the market going much higher, perhaps as high as $4. I'd be even more interested in shorting in this area.
Exhaustion Candle Needed
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As things stand right now, what I really want to see is an exhaustion candle that I can start selling because although it is going to see at least one more blast of cold, that might be what sets up the short trade. The reality is we are getting close to the end of the winter and as a result, there will be less demand for natural gas.
Most of what you're seeing here is fear of imported Canadian natural gas into the United States. But really at this point in time, we've already seen Mexico fold. It will only be a matter of time before the Canadians do. It's just the reality of the situation. So, I say, let it rally, look for signs of exhaustion, and then start shorting. The demand just isn't going to be there. The seasonality is almost over.
Most of the trading I do in natural gas every year is going to be to the upside for a couple of months, but there is the trade on the way back down. After that, it gets to be a little noisy and nonsensical for six months at a time, but there are two big trades to have every year.
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