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The natural gas markets have fallen again during the trading session on Tuesday as the $4.00 level continues to be a major thorn in the side for traders. At this point in time, a little bit of a pullback makes sense due to the fact that it is such a significant and obvious level to pay close attention to. That being said, I do believe that there is plenty of support underneath that will come into the picture, especially as we approach the $3.80 level. That is where we had broken out from to get to the $4.00 level so it makes a certain amount of sense that we may have to “retest it” in order to be confident in the move higher.
NATGAS Video 28.07.21
Keep in mind that there is a massive heat wave in the United States right now, and that is driving up demand rather drastically. As long as that is going to be the case, it does make a certain amount of sense that this pair will continue to look to the upside over the longer term, but obviously there is probably a certain amount of profit-taking. Beyond that, the large, round, psychologically significant figure does come into effect as well, so I think certain people are going to be more than willing to take profits quickly.
When you look at the longer-term chart, we had previously been bouncing around between $2.40 on the bottom and $3.40 on the top, measuring for a move to the $4.40 level. Furthermore, we had recently formed a bit of a bullish flag, which also measures for a move to the $4.40 level. With all that being said, it does make sense that we will continue to try to get there.
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This article was originally posted on FX Empire