- You can see natural gas has been a little bit positive during the trading session here on Tuesday, but this is a continuation of a massive move higher on Monday.
- Quite frankly, I look at this as an opportunity to start shorting again, but I don't have a signal yet. I'm looking for signs of exhaustion at the end of the day.
- If there is an exhaustive daily candlestick, I'm more than willing to start shorting. I'd be paying close attention to the 50 day EMA currently right around the $3.55 level in the front contract.
- And then after that, I'd pay close attention to $3.65 where the previous uptrend line coincides and has in fact offered some trouble for natural gas.
On the Other Hand…
On the other hand, if we just fall from here, that's fine. I don't have a problem shorting the market then, but I do prefer to have more runway if you will, for my trades. it helps with the risk to reward situation.
In that environment, we could go looking towards the $3 level, which would essentially fill the gap from a couple of weeks ago when we shot straight up in the air. This time of year, is a little bit tricky with natural gas because quite frankly, the demand falls off of a cliff as far as heating is concerned in the United States and the European Union, but we also have some buying in order to fill stockpiles that had been depleted during the winter.
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There are questions asked to whether or not the Europeans will continue to import a lot of liquefied natural gas due to the inability to buy Russian natural gas, which ironically is a relatively new problem. All this time, while we've been watching the war in Ukraine rage, the Russians have been sending natural gas to the European Union. The Ukrainians have been making money from the pipelines, and it's all been kind of a farce, truthfully. Now that the United States might be one of the biggest suppliers available to Europe with maybe the exception of Qatar, it'll be interesting to see how this plays out. I do think though that seasonality takes over and the first sign of exhaustion, I have no issue shorting this market and aiming for the $3 level.
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