Natural Gas Forecast: Faces Sideways Noise

In a broader context, it appears that the natural gas market is in the process of establishing an accumulation pattern, a trend that has been developing over an extended period. 

• Natural gas markets displayed a subdued demeanor at the beginning of the Tuesday session, with traders closely tracking the 50-day Exponential Moving Average.
• This quietude is somewhat typical for natural gas, given its cyclical nature. It’s only logical that the market remains tranquil for now, with a transition toward pricing in colder weather looming on the horizon.
• As winter approaches, the futures market has already begun to factor in the upcoming month of October.

Looking ahead, our attention must shift towards the European Union, a region grappling with a significant supply dilemma. The Russian gas pipelines are currently offline, and there are uncertainties surrounding gas supplies from Africa. This predicament leaves Norway in the spotlight as the potential savior of the European gas supply. While Norway will certainly make efforts to meet demand, it’s important to acknowledge that it cannot single-handedly fill the supply gap left by Russia and Africa.

Personally, I’ve been strategically building a position in the natural gas market for some time. However, I’ve chosen not to employ leverage in my trades. Instead, I’ve opted to use the ETF markets, though the CFD market is an alternative for those who prefer it. Regardless of your choice, it’s essential to exercise caution and avoid excessive leverage, given the current market uncertainties.

In a broader context, it appears that the natural gas market is in the process of establishing an accumulation pattern, a trend that has been developing over an extended period. The crucial milestone to watch for is the breach of the $3.00 level, which would bring the 200-day EMA into play. A successful break above this level could potentially open the door to a move towards the $5.00 mark, which serves as my long-term target. It’s important to temper expectations; this upward journey is unlikely to unfold overnight. Instead, I anticipate it will materialize gradually throughout the winter season.

For traders seeking opportunities, short-term pullbacks continue to present attractive buying prospects. However, I advocate a measured approach to adding to positions, avoiding the temptation to allocate substantial capital in a single move. Beneath the market lies a substantial support level at $2.00, although reaching this point may prove challenging, given the market’s reliance on the $2.50 level as a reliable floor in recent times.

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