The natural gas market first retreated during Monday’s trading session, displaying signals of weakness, but just below the $8.00 level, buyers have reemerged.
Analysis of Natural Gas from a Technical Perspective
Monday’s natural gas markets originally retreated throughout the trading day, but have since found several buyers below the $8.00 threshold. In fact, the natural gas markets have been fairly robust throughout the day, and if we are able to maintain our gains, this may be an indication that we will continue to rise substantially. Clearly, there has been a lot of noise in this approximate region recently, since the area between $8.00 and $8.50 continues to be quite noisy. In general, we will continue to see back-and-forth trading since the market is still attempting to determine what to do about the Russian issue.
If we were to break below the past several trading sessions, a larger decline would be possible. The market breaking down in this manner will likely seek the 50 Day EMA, which is located just below the $7.00 mark. Alternately, if we break over $8.50, there is nothing we can do to prevent this market from hitting $9.00. In such a case, “market memory” may come into play, since it was the recent high, but a break above it would open the door to still another leg higher.
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It is hard to think that demand will be that high in the contract’s home nation, but it does not appear to be a concern for most traders at this time. I believe that, given enough time, natural gas markets will eventually see a severe collapse, but we are definitely not there yet.