- The natural gas market has fallen during the early hours of Tuesday, as we continue to see a lot of noisy behavior.
- The market is currently testing the $3.20 level, which had been a swing low previously, and begins with a certain amount of support that extends down to the $3.00 level.
- The $3.00 level is the bottom of the overall consolidation area that I think the market is currently in, and therefore you have to look at it through the prism of a potential bounce back if we do get close to the $3.00 level.
Seasonality Might Be Different
The seasonality in this market might be a bit different at the moment, due to the fact that the Europeans are not buying natural gas from Russia, so despite the fact that this is a typically quiet time of year there is still plenty of buyers out there in comparison to the usual action that we see this time of year. That being said though, I don’t necessarily think that the market is likely to suddenly become extraordinarily bullish, I think it’s more or less a “fade the rallies” type of situation that we have here. In fact, that’s how I have traded natural gas for some time now.
If we were to somehow rally from here with any strength, I think you probably have a bit of a ceiling near the previous uptrend line, and of course the $3.60 level. Anything that raises toward that area and forms a wick, I am more than willing to start selling again. Ultimately, this is a market that I am very shot at the moment, but I don’t know if we will be able to break down below $3.00 this year, mainly because of the extremity waiting circumstances in the European Union, and you could make a little bit of an argument for artificial intelligence demanding more electricity, which of course quite often is produced by burning natural gas as well.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.