- Natural gas has fallen again during the early part of the trading session on Tuesday, as it looks like we are threatening a significant breakdown.
- The $2.75 level offers a certain amount of short-term support, but as I look at the chart, it seems as if it is only a matter of time before natural gas breaks through there and goes much lower.
- With this, I am looking at a market in my opinion that is going to go much lower, and that does make a certain amount of sense considering this time of year is very low demand for natural gas, as Americans are not heating their homes.
That being said, if we get a heat wave that can turn natural gas around and send it much higher, but it takes control of the market for only a few days, as he weaves typically are short-lived. The idea of course being that more air conditioning is demanded, and therefore more natural gas is burned to produce electricity. As the temperatures are somewhat reasonable at the moment in the United States, it all culminates for more bearish pressure for natural gas.
Top Regulated Brokers
Downtrend and Seasonality
We’ve been in a downtrend for some time, and of course there is a certain amount of seasonality that comes into the picture as well, as the markets will be looking at the lack of demand and pricing natural gas accordingly. However, there is the time in the next few months that we start to look forward to the winter, which of course demand will pick up. In other words, I think we are getting fairly close to making the final push lower, and a breakdown below the $2.75 level could open up a move down to the $2.50 level. After that, then we could be looking at the $2.00 level, but I would not get too far ahead of myself.
With the Europeans on tap to buy $250 billion worth of energy from the United States this year, that could provide a little bit of a boost this winter as well. In other words, the downside might be somewhat limited this summer in comparison to previous years in anticipation of that. Ultimately though, the trade that I have been invoking the most is the one of fading rallies as soon as they show signs of exhaustion. I will continue to do this for the time being.
Ready to trade daily Forex analysis? We’ve shortlisted the best commodity brokers in the industry for you.