During Thursday’s trading session, the natural gas markets reached the bottom of the broad consolidation range we have been in.
Analysis of Natural Gas from a Technical Perspective
Thursday’s trading session witnessed a big decline in natural gas prices, but buyers were plenty at the $8.03 level. This is the bottom of the broad consolidation area we have been in for some time, therefore a substantial amount of market support is anticipated. The natural gas markets have been optimistic for quite some time, and it does not appear that this will change in the near future.
If we break below the $8.00 mark, then the 50 Day EMA will certainly be threatened. Breaking below the 50-day exponential moving average (EMA) would allow for more selling, although this does not appear plausible at this time. The Europeans are compelled to purchase liquefied natural gas from the United States and transport it over the Atlantic, creating a great deal of supply-related anxiety. In other words, the Henry Hub deal is now highly distorted, at least until the Europeans accept they must purchase Russian gas.
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If we can break over the $9.50 mark, then a move to the $10.00 level becomes possible. There is a great deal of psychology involved, so I would expect to see a great deal of profit-taking in that broad area, as well as resistance. As has been the case for a very long time, the market remains a “buy on the dips” scenario at this time. Yes, the market has gotten far more volatile, which is something to be mindful of, but the outlook remains bright.