Natural gas markets have risen again during the trading session on Tuesday, reaching towards the 50 day exponential moving average. This is an area that typically shows some type of reaction in this market, so it is not a huge surprise to see that we could not break above there.
Traders continue to ponder the idea of hot temperatures in the United States and demand rising but there are also traders focusing on Chesapeake Energy going bankrupt. The market continues to see a lot of noise, and quite frankly it looks as if the $1.50 level is the absolute “floor” in the market. This is an area where we have formed a double bottom recently and has historically been important. With that in mind I like the idea of using the $1.50 level as a bit of a support level that we can count on. If the market were to break down below there, it would of course be a very negative turn of events but right now it does not look that likely.
NATGAS Video 01.07.20
If we can break above the 50 day EMA, and perhaps even more importantly the $1.80 level, then I think we are likely to continue going higher, perhaps reaching to the $2 level above. This is an area that has quite a bit of interest shown in it, and of course we have the 200 day EMA sitting right there as well. With all that in mind, I think that is essentially the “ceiling” in the market, lease for the time being. At this point, I like the idea of buying short-term pullbacks more than anything else.
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