The price of natural gas fell to $9 per million British thermal units before exhibiting hints of resilience. Due to the presence of so many moving parts simultaneously, this market will continue to be extremely chaotic. This candlestick does indicate that the market is attempting to recover and retest the $10 level. The $10 level is a large, round, psychologically significant number, therefore it is likely that the market will continue to view that region as a crucial battleground.
The 50 Day EMA will be tested at the $8.20 level if the price falls below $9. It is rising, so I expect there will be some support associated to it, and it is worth noting that we have broken below the bottom of a rising wedge, but have also rebounded, indicating that this market will continue to be volatile and vicious. Unless you have extremely deep pockets, the market is nearly untradeable at this time. This is due to the fact that huge turnarounds can be highly costly.
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Looking at this chart, I believe it is likely only a matter of time before we move in both directions; therefore, I would be extremely cautious regarding position sizing. It is obvious that the market will favor the upside in general, but we are getting stretched at the same time, and it is becoming increasingly apparent that the United States will not export a lot of LNG to the European Union, where it is required the most.
