Natural Gas Price Forecast – Natural Gas Continues to Drop

Natural Gas Technical Analysis

The natural gas markets have been a little bit noisy during the early hours on Tuesday, but quite frankly, I still think that even though we are trying to build a little bit of a base in this area, we are a far cry from being anywhere near trying to buy it.

Longer term traders, of course, could accumulate a position, but at this point you are looking at a market that is an investment and it’s not a short term trade. It’s hard to short natural gas all the way down at this low level, but at the same time, it’s hard to jump in with a ton of money. So, for example, you can use an ETF that is non levered and that way you can perhaps take advantage of natural gas and its cyclicality at the end of summer to start rallying. If we get a heat wave that could cause a pop like we had seen earlier in the year. But remember, you have to be cognizant of what’s going on in the United States. Natural gas is almost entirely driven by that, at least as far as the CFD markets are concerned.

The $2 level underneath should be a major support level, so we’ll see how that plays out. As for myself, I still have some ETF positions left. Doesn’t really matter. It’s something that I will hang on to until fall. So the day to day fluctuations can be sat through. It’s not a huge part of your portfolio, or at least it shouldn’t be, although any time this happens in natural gas, my email or email box gets full of people begging me to turn the market around.

Somehow, because of this, retail traders really have no business trading natural gas. Unless of course, you are apprised of what’s going on in the northeast in the United States as far as weather is concerned. Transmission through natural gas pipelines in the United States, specifically east of the Mississippi River, the weather in the Gulf of Mexico, and of course, production in places like Henry, Louisiana, which is what this contract is based on, is the Henry Hub contract. Because of this, you can play the cyclicality, but you don’t want to get married to your position. You don’t want a huge position on.

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