Natural gas markets rallied significantly during the trading session on Thursday, bouncing from the $2.20 level. Ultimately, this is a market that should continue to go higher in the short term, but I also recognize that the 50 day EMA at the $2.40 level is going to continue to cause a significant amount of resistance. Ultimately, this is a market that will continue to struggle overall, as the Americans drilled 17% more this past year than the year before. Ultimately, if we do break above the 50 day EMA that might be the beginning of the “winter pop” that I have been waiting for. However, the market has been very skittish when it comes to hanging onto gains, so at this point it’s unlikely to see a lot of confidence entering this marketplace. Ultimately, the market seems to be holding onto massive support at the $2.20 underneath, so if we were to break down below there the market could go as low as the $2.00 level.
NATGAS Video 27.12.19
Having said that, I think the easiest trade is to fade this market on signs of exhaustion. Ultimately, I believe that the market is oversold, but given enough time we should see this market fall apart and start being shorted again at higher levels. Ultimately, this is a market that is still dealing with massive amounts of oversupply, and as a result it’s difficult to imagine that this market will suddenly become bullish for more than quick short-term trades. Ultimately, this is a market that will continue to stay negative longer-term.
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This article was originally posted on FX Empire
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