Natural gas markets have rallied quite a bit during the trading session on Monday as we continue to see a lot of noisy behavior. That being said, the 200 day EMA is currently sitting that the $4.13 level, so therefore one has to look at this through the prism of being in a downtrend. In fact, we have lost about 25% in the last month, and while that is a bit excessive, the reality is that natural gas had no business being that bullish, as it is purely an American contract. Quite frankly, natural gas is not something that we are hurting for here in the US.
NATGAS Video 21.12.21
Further adding downward pressure on this market is the fact that we have seen warmer than usual temperatures in the United States, that of course drives down demand for natural gas. Beyond all of that, it is very possible that inflation has already peaked, although that remains to be seen. We are starting to see commodities in general get hammered, all the way from natural gas to cotton. Because of this, it is very likely that the market is trying to send us a much bigger signal, and therefore I am looking for rallies to start shorting.
Whether or not I would do it here is probably something that I would have to make a decision based upon short-term charts, but the higher we go, the more likely I am to start shorting this market. To the downside, the $3.50 level will be a psychologically important support level to pay close attention to.
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