The natural gas market has seen another bullish weekly candle, as the market is trying to do everything it can to find a bottom. The lack of supply in the European Union continues to be a major driver at this point in time.
Natural gas markets have rallied rather significantly during the course of the week to reach the $2.75 level. This is a market that is trying to take out the shooting star from a couple of weeks ago but is in the midst of a lot of noise anyway.
I think there is going to be a lot of attention paid to the $3 level, and at this juncture, I believe that natural gas is going to continue to be more or less a buy on the dip type of market. I would not employ a lot of leverage though because this is a type of market that can really punish you when you’re wrong. For myself, I use ETF positions, but you can also use small CFD positions if you don’t have the ability to trade.
European supply dwindling continues to put a bit of a floor in the natural gas Charts, although it’s worth noting that the contract that most people are trading is actually the US contract, So things have to get pretty bad in Holland for Europeans to come over to the US and start grabbing natural gas at Henry, Louisiana and other hubs, which is what’s being priced in right now.
Typically speaking, this is a fairly weak time of year. So, it’s a bit of a stretch to think that we’re just suddenly going to take off to the upside, but there is a certain amount of geopolitical concerns out there. After all, the land-worn Ukraine has gone nowhere, and therefore, natural gas could continue to be a major issue. If we can take out the $3.50 level, this is a market that can really take off, but right now I’m not really looking for that. I think we’re in the process of building a base.
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Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.