Natural Gas Price Forecast – Natural Gas Continues to Look Soft

Natural Gas Technical Analysis

The natural gas markets dropped a bit during the trading session in the early hours on Tuesday as we are hanging around the $2 level. The $2 level, at least in the spot market, is an area that a lot of people have been paying close attention to. I think given enough time, we have a situation where traders come in and pick this up as an investment.

Having said that, you’re not trading this, you’re an investor at this point. Only fools trade the natural gas markets from a short-term perspective because retail traders simply do not have the necessary information and in fact, most natural gas traders focus just on that market. Keep in mind you’re trading the US contract.

So, I get a lot of emails on an almost daily basis from people in the Middle East not understanding the price action. And that is because this is something that is a very localized market. You need to understand weather patterns in the Northeastern part of the United States, whether in the Gulf of Mexico, whether or not hurricane season is causing issues, the land and pipelines, and of course, demand.

The easiest of all of these factors to think about is demand, and demand picks up more in the wintertime. So as futures markets start to price those in, sometime in the early part of fall or so, you’ll start to see traders come in for mid-winter contracts, you’ll see price rise. That’s a trade that happens almost every year.

I am investing little bits and pieces in an ETF with no leverage. You can do the same with CFDs as long as the swap isn’t too bad, and you keep your leverage to almost nothing and just simply collect your profits later this year. That’s what I mean by this is an investment. The next five cents one way or the other is almost impossible to predict in this market unless you have access to all of the information I mentioned previously.

Most retail traders just don’t have it, and they believe something like a hammer candlestick is going to tell them where the market’s going to go. This is a very fundamentally driven market, and therefore, if you don’t have the information, the only thing you can do, really, is play the odds. Right now, the odds favor the upside. But the last thing you want to do is be highly levered and watch your account lose 30, 40% of its value waiting on that bounce that might come in two weeks, it might come in two months. You just don’t know.

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