Natural Gas Price Forecast – Natural Gas Continues to See Support

Natural Gas Technical Analysis

The natural gas markets have been fairly bullish in the early hours on Wednesday as we continue to see a lot of noisy behavior. Keep in mind that the $2 level in the spot market will of course attract a lot of attention, so it’s not a huge surprise to see a bit of a bounce.

As for myself, the way I’ve been playing this market is that I have been buying the occasional dip using the area around the $2 level as a potential entry region. Natural gas, of course, is cyclically very weak this time of year due to the fact that heating demand is almost unknown. But at this point, I think you’ve got a situation where traders are probably trying to build up their position for the fall, when heating demand definitely picks up.

If we do get a heat wave between now and then that could cause a bit of upward momentum, at least for the short term. But in the longer term, I think this is about building up your position slowly. I don’t have any leverage in this position. And at this point, every time the market pulls back a little bit, I’m looking to add to an ETF position. But if you are trading the contract for difference markets, you can do so with small positions and build up.

It’s all about keeping the leverage down because you don’t really know when this market will take off to the upside. In general, I have no interest in shorting this market because quite frankly, it’s at such an extreme low that there will be a certain amount of support right around this region anyway.

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