- The natural gas markets have fallen again during the trading session on Friday as it looks like we have recently formed a significant “double top” in this market.
- All things being equal, the market is likely to continue to see a lot of questions asked about the temperatures in the United States as we are heading toward spring.
- After all, as temperatures rise again, the demand will drop in places like Boston, New York, and Philadelphia.
Most people don’t realize that when they are trading natural gas, they are almost always trading a contract that is American centric, and therefore they need to be cognizant of what’s going on in the United States. Furthermore, we also have to keep in mind that although there are a significant amount of exports to the European Union, the reality is that it’s only a small portion of the market, as the United States already exports quite a bit to Asia.
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Technical Analysis
The technical analysis for this pair is pretty interesting to me at the moment, due to the fact that we had just formed a major double top, but we also are at a time of year where you generally see the price fall, as the natural gas markets are very cyclical. Because of this, it would not be a huge surprise at all to see this market plunged, and that’s essentially what I’m waiting for. The 50 Day EMA currently sits right around the $3.65 level, which is of course an area that would attract a certain amount of attention as potential support. If we were to break down below there, then the next target would be the $3.50 level.
Ultimately, this is not a market that I am interested in getting long of, and even if we do get some type of rally at this point, I think it will just invite more selling. After all, we could get another winter storm between now and when the weather breaks completely, but that just opens up more opportunity for a short sale.
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