The natural gas markets have shown themselves to be resilient again during the trading session on Tuesday, as the market has broken above the 50 day EMA. This of course is a psychological barrier, and it is worth noting that we still have a gap above that needs to be filled. That gap is at roughly the $3.00 level, so therefore I think a lot of people will be aiming for that level. Above there we could go looking towards the $3.20 level, possibly even as high as the $3.40 level to revisit the recent high.
NATGAS Video 25.11.20
Now that we have filled the huge gap from several weeks ago, buyers are willing to jump in and pick this market up. It makes quite a bit of sense considering that the contract that futures are trading right now is the January month, and that of course is one of the busiest months of the year for demand as northern hemisphere residents will be looking to heat their homes. We are looking at colder temperatures coming down the road, so that of course puts a bit of a floor in the natural gas markets as well.
All things being equal, I believe that this is a market that will give us an opportunity to take advantage of these cheaper prices for the short term, as the cyclical trade is so well known. At this point in time I still believe in “buying the dips” but recognize that natural gas can be rather thin at times, so therefore the market is prone to erratic trading. Keep in mind that this is Thanksgiving week so volumes will drop off.
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