Natural Gas Technical Analysis

The natural gas markets have been sideways for several days and I think at this point in time, we are starting to question whether or not we have enough momentum to continue to go higher. If the market can break above the $2.35 level, then it’s possible that we could go look into the $2.50 level. That being said, this is a situation where I’m looking to buy little bits and pieces on dips.

I also am buying natural gas via ETF to take the leverage out of the position because as you know, and as I’ve been preaching months now, the best way to trade this market this time of year for me at least has been to take the leverage out of this situation and just simply hold on to my investment. This is because eventually we will see natural gas prices spike when we have to heat the northeastern part of the United States. We’ll have to wait and see how long that takes, but this is a way for me to be involved but not necessarily be concerned.

If you have a huge part of your portfolio, and especially if it’s leveraged in the natural gas markets, it can give you heartburn to say the least. I do like dips as buying opportunities, and I suspect I may hang on to the position for a couple more months and then just simply dump it once it spikes to a fairly high level. The $3 level would be an ideal target, but you just take what you get.

This is a cyclical trade that happens almost every year as places like Boston, New York City, Philadelphia, Cleveland, Columbus, Pittsburgh, all start to get colder. Remember, the natural gas market is a US contract that you are trading, it’s not a Dutch one. So, the European Union can have somewhat of a knock-on effect, but it’s not as drastic as people think.

For a look at all of today’s economic events, check out our economic calendar.