Natural gas at the daily view.
Natural gas experienced a pullback. That shouldn't be surprising at all since profit taking after a spike up is normal.
The lower blue line is the ascending resistance stemming from March 23rd. Interestingly, a long-term channel line is also acting as temporary resistance.
So, natural gas has two choices. Either natural gas consolidates here for another move up or move down to a key support below around $1.98. That channel line below served as a support from years past once momentum to the upside picks up.
For natural gas, you have to think in bigger time frames. Most gas traders that I see only see it at 15 minute or similar small frame views. By being stuck at smaller time frames, traders tend to lose the big picture. For example, many permabears didn't see that inverse head and shoulders pattern in the last 2 months nor the bottoming pattern at the weekly view. Furthermore, natural gas is currently forming a big bull flag... for now. If natural gas reaches 1.98, the bull flag is still intact. August usually provides the summer spike. However, September is when natural gas usage slows down.
Why don't I think natural gas will continue to decline? Seasonality is obvious. A wave of gas companies already filed for bankruptcy back in June which cuts down the number of suppliers in the longer term. The Midwestern states are also still open where a large part of the industrial sector resides. The industrial sector is one of the largest users of natural gas by the way. The Midwestern states are much more sparsely populated and the population travels less overseas too. Last year, natural gas declined due to the US having one of the warmest winters in recent history. If I remember my science classes from college, nature has a way to balance things out. Current forecasts for this coming winter in the US is another polar vortex.
That's fundamentals. Let's look at it from a technical view. Last month, natural gas was only around $0.50 from the historic lows. Gas also already had a 2-year bear market. As everyone who ever traded for years, every market cycle and every bull/bear market comes to an end eventually. The summer months show an obvious bottoming pattern. It might be extended. The flag support for gas is around 1.58. That said, the downside is much less than the upside. Let say, you longed from 1.90 and the prices dropped to 1.58. Gas is very seasonal. You would only play the waiting game for prices to ramp up in preparation for fall and winter. If you short from 1.90 and enters its seasonal bull run, what are the chances that it will return back to the 1.50? I don't know myself, but it seems lower than the previous scenario.
Think about it. If you go short near the all-time lows, that's as reckless as going long near the all-time highs. It's simple probabilities. Market sentiment about natural gas is excessively bearish. If everyone is bearish on an asset, then that's actually a bullish signal. Why? If all the bears are already in a short position, what will stop buyers from driving the price up?
The issue with gas is that you have to look at it from a macro view like Bitcoin. The big picture will always trump the small movements.
Natural gas experienced a pullback. That shouldn't be surprising at all since profit taking after a spike up is normal.
The lower blue line is the ascending resistance stemming from March 23rd. Interestingly, a long-term channel line is also acting as temporary resistance.
So, natural gas has two choices. Either natural gas consolidates here for another move up or move down to a key support below around $1.98. That channel line below served as a support from years past once momentum to the upside picks up.
For natural gas, you have to think in bigger time frames. Most gas traders that I see only see it at 15 minute or similar small frame views. By being stuck at smaller time frames, traders tend to lose the big picture. For example, many permabears didn't see that inverse head and shoulders pattern in the last 2 months nor the bottoming pattern at the weekly view. Furthermore, natural gas is currently forming a big bull flag... for now. If natural gas reaches 1.98, the bull flag is still intact. August usually provides the summer spike. However, September is when natural gas usage slows down.
Why don't I think natural gas will continue to decline? Seasonality is obvious. A wave of gas companies already filed for bankruptcy back in June which cuts down the number of suppliers in the longer term. The Midwestern states are also still open where a large part of the industrial sector resides. The industrial sector is one of the largest users of natural gas by the way. The Midwestern states are much more sparsely populated and the population travels less overseas too. Last year, natural gas declined due to the US having one of the warmest winters in recent history. If I remember my science classes from college, nature has a way to balance things out. Current forecasts for this coming winter in the US is another polar vortex.
That's fundamentals. Let's look at it from a technical view. Last month, natural gas was only around $0.50 from the historic lows. Gas also already had a 2-year bear market. As everyone who ever traded for years, every market cycle and every bull/bear market comes to an end eventually. The summer months show an obvious bottoming pattern. It might be extended. The flag support for gas is around 1.58. That said, the downside is much less than the upside. Let say, you longed from 1.90 and the prices dropped to 1.58. Gas is very seasonal. You would only play the waiting game for prices to ramp up in preparation for fall and winter. If you short from 1.90 and enters its seasonal bull run, what are the chances that it will return back to the 1.50? I don't know myself, but it seems lower than the previous scenario.
Think about it. If you go short near the all-time lows, that's as reckless as going long near the all-time highs. It's simple probabilities. Market sentiment about natural gas is excessively bearish. If everyone is bearish on an asset, then that's actually a bullish signal. Why? If all the bears are already in a short position, what will stop buyers from driving the price up?
The issue with gas is that you have to look at it from a macro view like Bitcoin. The big picture will always trump the small movements.