Natural gas markets initially tried to rally during the trading session on Wednesday but pulled back a bit from this downtrend line that I have drawn on the chart. The $3.00 level above is significant resistance, and we have pulled back from that area that was a previous gap. Ultimately, I do think that the 50 day EMA flattening out suggests that the market is trying to figure out where to go next, but at this point in time if we can break above the $3.00 level, we would then go looking to fill that gap. Ultimately, I think that the market not only break that level but goes higher.
NATGAS Video 03.12.20
On pullbacks at this point in time natural gas should be relatively well supported due to the fact that the cold weather is certainly still going to be an issue in January, but we have a few more weeks before we see some type of selloff due to the cyclicality trade. At this point, I think that we could make an explosive move to the upside and go looking towards the $3.40 level. Whether or not we can break above there is a completely different question. As far as selling is concerned, I simply have no interest in doing so anytime soon, but once we start trading the spring contracts, I would be more than willing to do so.
This contract currently is the January contract, which is probably one of the highest demand months out of the year. That being said, one drag on demand is the fact that the economy in the United States is slowing down but the heating demand is still going to be there.
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