- The natural gas market has rallied a little bit in the early hours on Wednesday as we continue to see a lot of noisy behavior.
- When I look at this chart, I have to question whether or not we have reached the peak.
- After all, we had a major shooting star form about a week ago, week and a half ago. Last week's weekly candlestick was pretty ugly.
Keep in mind, this is often a cyclical trade and therefore you need to pay close attention to this time of year because it gets very volatile. And of course, we have to start thinking about the fact that heating is no longer an issue. So, with that being the case, it's probably only a matter of time before we fall apart. This is a cyclical trade I do every year. I buy when temperatures start to drop, hold on to it and then get rid of it at one point or another in the middle of winter and then short it when temperatures start to rise. That being said, it is a very volatile market, and you have to be careful with your position size.
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Futures Continue to Watch the $4 Level
Looking at the futures market, it's easy to see that the $4 level is an area that has been support lately. So, I think if we can break down below there, maybe somewhere around $3.90, I might have a go at shorting this commodity after all, it's only a matter of time before the warmer temperatures in the United States allow for a replenishing of the stockpile of natural gas.
There are some questions out there about the European union and whether or not Russian gas has any part to play, but I suspect that the progress being made in the peace talks in Ukraine, albeit slower than most people would like, could also be a major negative effect on natural gas if peace does break out. So, with that being said, I am looking to short this market, but I recognize it's very noisy at the moment.
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