The natural gas market can be used as a signal for other markets as it has triumphed over natural gas because the Americans can now supply the European Union with natural gas.
- The natural gas market has been under significant selling pressure during the trading session on Wednesday, making it challenging to imagine a scenario where one would be a buyer of natural gas.
- Down 79% from the peak, it appears as if the market is going to take quite some time to find its footing. The 50-Day EMA is sitting just below the $3.00 level, which is likely to be the ceiling in the market.
- It is almost impossible to see any significant buying pressure in the market, which has been struggling for quite some time.
The natural gas market can be used as a signal for other markets as it has triumphed over natural gas because the Americans can now supply the European Union with natural gas. However, this is likely to be short-lived as the lack of demand for natural gas is looming. With rising temperatures in the northern hemisphere, the demand for natural gas is going to decrease, wiping out the idea of using it to heat homes. Additionally, there is going to be a lack of industrial demand for natural gas as the global economy is almost certainly slowing down. As a barometer for the economy, natural gas can be used alongside the copper market and crude oil market.
Even if the market were to break above the $3.00 level, the $4.00 level would be the next area of interest. However, what is more, likely is an accumulation phase through the next several months. It is worth noting that there is always the potential for a rally that can be sold with a long way to the upside, but currently, it does not look like the market can get off the floor. The market is lacking any significant demand, and the ceiling is likely to be the 50-Day EMA just below the $3.00 level.
Regardless, I don’t think this is a situation where we are going to see a lot of trading opportunities to the upside. I think given enough time, we are going to have a huge selling opportunity, but this might be a market that is trapped between the $2 level in the $3 level between now and the end of summer. This will be especially true if we start to see economies around the world slow down even further.