Natural gas markets continue to see sideways action overall, as we are in a mild time of year, weather-wise.
Natural Gas
Natural gas markets have been quite quiet during the trading session on Thursday, as we are hanging around between 2 major moving averages in the form of the 50-day EMA underneath, offering support, and the 200-day EMA above, offering resistance. It's worth noting that the natural gas market has struggled a bit recently to find any type of momentum, and that's not a huge surprise considering that there are so many different headlines coming out of the Middle East that will remain important.
The Middle East has seen a bit of relief as far as the memorandum of understanding being signed by the Americans and the Iranians. But the reality is that it would only take 1 incident to have people freaking out. That being said, it's worth noting that this is a US-centric contract, and the weather in the United States right now is fairly mild, and storage is fairly high.
Key Price Levels and Trading Strategy
If we do get a bit of a spike in this general vicinity, I think that the $3.50 level will be a hard barrier to break through. If we can break above that level, then it's likely that we will go looking to the $4.00 level.
Ultimately, on breakouts this time of year, I like to fade the first signs of exhaustion. The market breaking down below the $3.00 level, I think, opens up a possibility of a drop down to the $2.75 level and then after that the $2.50 level. Natural gas is not a market I buy this time of year. The rallies that we do get of any substantial momentum end up being short-term.
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