Natural gas markets gapped lower to reach down towards the $2.20 level during the trading session on Monday, turning around to form a bit of a hammer. However, the market has not filled that gap yet, and it is a rather significant one. By breaking below the uptrend line, that is a strong sign to the negative, but at this point if we can break above that gap at continue higher it would be an extraordinarily strong sign.
NATGAS Video 10.12.19
Natural gas markets are extraordinarily thin, and it doesn’t take much to spook the market. There is an oversupply of natural gas from a systematic point of view so it’s likely that we will continue to see downward pressure from a longer-term standpoint. That being the case, I still believe that there is a short-term pop coming this winter but quite frankly it’s very difficult to time. If you can keep your position size small enough, then it’s likely that you can profit. Otherwise, if you are playing the futures market you will probably continue to have issues.
A breakdown below the bottom of the range for the day could send this market down to the $2.00 level, which is a large, round, psychologically significant figure. That level being broken would destroy the uptrend. Having said that, expect a lot of back and forth and choppy behavior as this market will probably move on the next weather-related headline. That being said, playing the market via options might be the best way to go, or at least CFD markets as you can use small positions.
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This article was originally posted on FX Empire
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