Market Shows Promising Gap Higher

Given the cyclical nature inherent to this market, much of the anticipated trajectory may already be embedded in the market’s course. 

• The natural gas market demonstrated an optimistic upward gap as the trading session commenced on Monday, indicative of the ongoing endeavor to reach the $3 threshold.
• This initial breakthrough opens the door to the potential for a more substantial advance if the psychological barrier at $3 is successfully surpassed.
• Notably, the breach of this pivotal level could prompt a considerable wave of short covering, compelling those with negative positions to exit. In such a scenario, the natural gas market could experience a robust uptrend.

The subsequent technical target to monitor is the 200-day Exponential Moving Average (EMA), which aligns closer to the $3.33 mark. Achieving this milestone could mark the next phase of the market’s upward journey. Looking further ahead, the $5.00 level emerges as a long-term aspiration. The prospect of this being realized within the year isn’t far-fetched, particularly considering the evolving natural gas landscape in the European Union. Recent developments, such as the coup d’état in Niger, pose threats to the supply chain, potentially forcing nations to scramble for natural gas this winter. While Norway has made efforts to augment its contribution, the limitations in replacing Africa or Russia remain apparent.

Given the cyclical nature inherent to this market, much of the anticipated trajectory may already be embedded in the market’s course. An increase in volume within the ETF market observed over recent weeks signifies heightened investor interest. As Wall Street prepares to resume activities following the summer break, it’s plausible that an influx of volume will continue to buoy the market’s upward movement. As it stands, adopting a strategy of purchasing during market dips, and utilizing conservative leverage, emerges as a prudent approach. The primary challenge lies in patiently awaiting the market’s definitive surge.

In this context, there exists no scenario where a position would be sold. On the contrary, a strategy of accumulating positions for the upcoming fall season is a considered course of action. The prevailing sentiment is anchored in the anticipation of the market’s ascendancy, underpinned by the evolving dynamics within the natural gas sector.

Potential signal: On any move above $3.00, I will be adding aggressively to an existing long position. There is no real reason to think that the market won’t do this, but in the meantime, I am buying here, but with smaller positions. I have a stop loss at the 2.40 level.

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