Natural gas remains very sideways at the moment, as the markets continue to see a lot of questions about demand at this point in the year.
Natural gas continues to see a lot of noisy behavior during the trading session on Tuesday as we are basically hanging around between the 50-day EMA below and the 200-day EMA above.
Ultimately, I think this is a market that is just killing time trying to figure out whether or not we are going to see any pickup in demand.
The reality is that most of the time, this time of year isn't necessarily strong for natural gas, so I do tend to be a net seller. There is the occasional heat wave in July that comes into the picture, but that is a short-term move. Those short term moves I normally fade and start shorting right away.
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Key Support and Resistance Levels
To the upside, I see the $3.50 level offering quite a bit of resistance. I would be surprised if we broke above there and quite frankly, I don't think that happens without some type of heat wave coming.
If we break down below the $3 level, then I think that would be very ugly, and I do believe that traders at that point in time would probably be looking to send this down to the $2.75 level, an area that has been important a couple of times in the past.
That being said, this is a market that I prefer to sell signs of exhaustion after short term rallies and typically will trade it as such this time of year.
I do not have any interest in buying natural gas even if we do get a heat wave for anything more than a short-term pop. I don't hang onto that position. I think this is a scenario where traders continue to look at this through the prism of skepticism and therefore, I think short-term traders continue to fade any signs of strength that fail.
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