Natural gas markets gapped lower to kick off the trading session on Tuesday and then just kept on going to the downside. At this point in time, the market looks very negative, but we did fill a bit of a gap so that could cause short-term support. All things being equal, the market is going to continue to be very noisy, but of course it is moving mainly on the idea of warmer weather coming more than anything else. The 200 day EMA underneath is an area that could cause a little bit of support near the $2.48 level, and that of course the $2.40 level. All things being equal, this is a market that I think does go lower, as demand simply should fall through the floor.
NATGAS Video 20.01.21
In the meantime, I like the idea of fading short-term rallies, and it now looks as if the “ceiling in the market” has drifted down towards the $2.80 level. To the downside, we could go as low as $2.00, but that is probably going to take some time. After all, there will probably be a short-term cold snap or two ahead before we get into the springtime in America, but we are already trading the February contract, and more than likely will continue to see more bearish pressure the further out you go in the year.
The market will continue to be very choppy to say the least, but this simply means that you need to keep your position size somewhat reasonable. I think that given enough time the market will continue to rollover, because of the major amount of oversupply that is still out there, despite the fact that we have just gone through winter.
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