During Tuesday’s trading session, natural gas prices rose slightly as the market continues to recover from an extremely oversold state. By doing so, we have hit the $6 level, but it appears that we will pull back and continue to experience weakness. I am uncertain as to whether I would short here, as I would prefer a better opportunity at a higher level.
Keep in mind that natural gas prices are falling because of the global economic slowdown, which has a significant negative impact on this sector. The 200-Day Exponential Moving Average is extremely elevated at $6.76 and falling. That could be your “limit,” but you should also be aware that there is so much gas in America’s pipelines and regions that it sells for $0.20 per gallon! Obviously, these are extremely minor markets and wholesale markets, but ultimately, they reveal how much natural gas has been backed up throughout the system.
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I believe that we will eventually reach $5.00, albeit it may take a while. In light of this, rallies that exhibit indications of weariness are ideal shorting opportunities, despite the fact that colder weather is on the horizon. The 50-Day EMA is falling sharply, and it appears to be attempting to create the “death cross” when it falls below the 200-Day EMA. Obviously, this is a longer-term very signal.