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Natural Gas Forecast: Pulls Back After Surge

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
  • The natural gas market initially shot higher during the early hours on Wednesday to test the 200-day EMA but has since been squashed as that technical indicator certainly has brought a lot of sellers back into the market.
  • Quite honestly, I think this is a market that got ahead of itself, but we are going higher eventually.
  • After all, there is cold weather coming eventually, and traders will start to look at the demand side of things in America as being very bullish.

As things stand at the moment, the temperatures in the US are cooling, but aren’t cool enough to change to overall attitude of markets at the moment.

The cyclical trade is coming into the picture and therefore I have been buying an ETF position and little bits and pieces in order to take advantage of the cyclical trade when the Northeastern part of the United States, starts to use more, natural gas to heat homes. So, with that being the case, I think you have a situation where the 50 day EMA underneath offer in support. In general, this is a market that I think will continue to be a buy on the dip scenario, but you need to do so with a very, very small position because of the massive amount of volatility that natural gas has under the best of circumstances. And right now, we don't have the best of circumstances.

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I do think that if you're very slow and methodical in building up a position, you can do what I do and just wait for it to spike once we get word of cold weather in the United States, take your profit and move on.

Natural Gas Forecast Today 05/09: Pulls Back (graph)

I have no interest in shorting this market, but then again, I don't have any interest in trying to trade this market. It's an investment. Natural gas is almost impossible to trade cleanly because it is also weather-based and of course, with transmission line storage and so many other variables.

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Christopher Lewis
About Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
 

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