Natural Price Forecast – Natural Gas Continues to See Noisy Chop

Natural Gas Technical Analysis

The natural gas markets have rallied quite significantly during the early hours on Tuesday, but at this point, we are still very bearish. Keep in mind this time of year is typically poor for natural gas. Although we’ve had a hurricane in the Gulf of Mexico which could affect production. That being said, I don’t even know what that’s going to be the case. And even if it were, natural gas is a market that, again, typically doesn’t do well here. All things being equal, this is a market that short term pullback should continue to be buying opportunities for investors and not traders.

For myself, I’m involved in an ETF which means I don’t have any leverage, so I don’t care. I understand that later this year, natural gas will in fact climb probably quite drastically. And then once it gets really aggressive, I sell it and move on with my life. This is a small part of my portfolio. Natural gas is never something that you should trade.

A lot of natural gas is not a retail traders type of market. And in fact, I cannot tell you the number of times I’ve gotten an email from some random person out there begging me for advice on a horrible natural gas position that they had over levered. However, if you have the ability to invest in either an ETF or if you’re just smart enough to use a small CFD position, then you can trade natural gas.

But you have to think of it more as a swing trader and not a short term trader. You are not scalping the euro here. You are trading one of the wildest and fundamentally driven markets based on things like transmission rates in the lines of the United States, whether in places like Boston. Hurricane patterns in the Gulf of Mexico, production at facilities in the Gulf of Mexico.

And of course, you have to keep in mind that you’re almost always trading some variant in the CFD market of the Henry Hub contract. That’s a U.S. contract. So, while European lack of supply can have some of an effect on this market, there’s a huge reason why natural gas might be a couple dollars in the United States, but something like 13 in the Netherlands.

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