- As I look at the natural gas market on Tuesday, but really at this point, I think we’re in the middle of a consolidation.
- I expect that eventually the natural gas market will try to break above the $4 level, but it will take some effort.
- The cold temperatures in the United States, believe me, I am very aware of them, continue. That being the case, I think demand for natural gas will continue to be somewhat strong.
Keep in mind that sooner or later, in the next 30 to 40 days, we will begin to focus more on spring. But right now, we probably have one or two more spikes left in the natural gas market. This is common at this time of year, as the weather is still bad.
Support below?
Going forward, I see the $3.40 level as important, especially as the 50-day EMA is racing toward it. If we can clear the $4 level, that opens up a move to the $4.50 level. Natural gas is a very cyclical commodity, so you have to be aware of that because it’s mostly driven by cold weather up north, especially in the United States. But we also have added complexity this year because the Europeans are probably forced to buy liquefied natural gas from America, which will cost them three to four times more than usual because of the process and the delivery and everything else. This connects it to the rest of the world as long as the USA surpasses Europe. As long as we can stay above the 50-day EMA, I still view the pullback as a buying opportunity. And I think it’s very possible that natural gas will hit $5 at one point or another.
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