Natural gas markets have captured my attention as the attacks on Qatari LNG continue.
Natural gas markets have captured my attention during the session due to the gap higher and the fact that there are so many different things going on at the same time. For example, there is extraordinarily massive amounts of supply coming out of the United States and quite frankly we are running out of storage at this point. However, Qatar continues to see damage to its liquefied natural gas hubs and that is going to cause the Europeans to import US natural gas before it is all said and done.
I suspect people are trying to get in ahead of time, ahead of the rush, and perhaps move to the $3.50 level. We have the 200-day EMA in that neighborhood, and I think that would be a bit of a ceiling in the market.
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I am looking to fade this market because I know how weak demand is this time of year, and of course the temperatures are starting to warm up in North America. I also recognize that perhaps by the time it is all said and done, it is Russian natural gas that will be what the Europeans are forced to buy.
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With that being said, there is a lot of geopolitics going on, but looking at the chart, you can see that the $3 level offered support again; it has for about 15 months now. I think this simple bounce is something that I want to play. I want to short the first signs of exhaustion. I suspect that they will come in a day or two and when they do it is definitely something to take advantage of. I don't have any interest whatsoever in getting too cute here. I am just going to wait for an exhaustion candle to start selling. I don't know if that will be on the daily basis or if it will be something on a shorter time frame, I guess I will just know it when I see it, but the closer it is to the $3.50 level the more interested I am in fading signs of exhaustion.
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