Natural Gas Technical Analysis
Natural gas markets have broken down below the bottom trend line of a rising wedge. And it does suggest that perhaps we are going to continue to drop towards the $2.50 level. The $2.50 level of course has a certain amount of psychology attached to it, but if we actually follow to the bottom of the wedge, we could go as low as $2.35. I think that makes a lot of sense actually, because quite frankly, this is a market that typically doesn’t do well this time of year.
There had been a heat wave in the United States and that of course has a major influence on demand, but that’s a temporary thing. I do think that eventually natural gas will go higher, but a short-term pullback offers value. The $2.35 level is an area that I think a lot of people will be interested in. For myself, I am long of this market via the ETF. I don’t have any interest in a lot of passive leverage due to the fact that this market can move so rapidly.
With this, it’s longer term investment for me. And I do like the idea of buying little bits and pieces on dips. If you don’t have the ability to go to the ETF market, then you can do small bits and pieces of CFDs. Either way, the key here is to not get over levered to natural gas in either direction, even if you choose to short it. I do think given enough time, she’ll probably go looking to the $3 level or so.
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