Gas technical analysis
Natural gas markets have been negative for the past few days and Monday was no different. As futures markets opened Monday we started to see a lot of negativity with a lower gap earlier in the week. Natural gas continues to be highly volatile, but that shouldn’t come as much of a surprise considering it ranks second only to bitcoin in its volatility profile of any market that trades at reasonable volume. In other words, you have to be very careful with this market under the best of circumstances.
Heatwaves in the United States have caused quite a bit of noise, but we’re moving away from that a bit now, so demand should start to fall. If that is indeed the case, then it is very likely that we have a scenario where natural gas continues to go much lower. If we break below the 50-day EMA, the next target will be $7.00. A break below this level opens the possibility of a descent to the 200-day EMA, something I’m not exactly expecting but I know could happen.
For this reason, I tend to see rallies that show signs of exhaustion as opportunities going forward. Frankly, the price of natural gas has gotten a bit out of hand, and now that the Germans can’t buy US natural gas, at least not enough to solve their problem, that premium is starting to work itself out in the market.
Video on the natural gas price forecast from 08/09/22
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