Natural Gas Weekly Technical Analysis

The natural gas market shot higher during the course of the week initially but gave back gains as we continue to see very weak momentum. This is a market that quite frankly is only traded for the cyclical trade, unless of course you know what the weather is going to be ahead of time. And I’m deluged on an almost daily basis with retail traders trading this market, which they have no business doing, literally have no business doing. However, your broker would love to take your money out of your account. So, they allow leverage positions in natural gas that go far beyond what a professional trader would ever do.

This isn’t to say that you can’t make money in the natural gas markets. It’s just that unless you understand transmission lines in the United States and what’s going on there, storage in the United States, weather patterns in the Gulf of Mexico, temperatures in the northeastern part of the United States, heat waves in the southeastern part of the United States, and maybe Europe, which is a very minor part of this contract, then you don’t really know what you’re doing.

However, at the end of summer and as we go into fall, typically we see a rise in the natural gas markets as temperatures will plunge in the United States. Makes sense, it happens every year. The only way to do this is with a small position and just take your profit when it rips to the upside. I do it every year and I make probably 2% to 3% of my total gains of the year doing this. That’s all this market’s for me. I wouldn’t sell the market, but the closer we get to $2, the more likely I am to add to a position.

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