US natural gas markets have pulled back in the trading session on Tuesday as many doubts remain. Right now on the chart it can be argued that there is a head-and-shoulders pattern, but I think that at a technical level the most important thing is the 50-day exponential moving average because lately it has been offering support dynamically.
Video technical analysis of natural gas 03/16/22
To the upside the $5.00 level has slowed prices down on more than one occasion so in the short term I don’t expect that we can break above that benchmark. In the end it is an important number on a psychological level since the round that we already saw a high low pressure in the past, therefore now it should continue to offer resistance. Apart from that, temperatures will soon rise and that will cause the demand for natural gas to fall, so I see it likely that we will eventually break below the 50-day average and go towards the 200-day average that is at the level of lot 4.20$.
Lately we have seen a lot of noise in the market and I think it could be related to all the headlines that are being published about Ukraine, however in the long term one of the factors that can affect the dynamics the most is knowing if the US really whether it starts supplying large quantities of liquefied natural gas to Europe or not, since at the moment those exports are relatively small.
Despite this possibility that foreign demand for American gas will increase, we believe that demand will fall in the short term and therefore I recommend trying to enter short at every opportunity that arises.
To see all the economic events of the day, we recommend you visit our economic calendar.
This article was originally published on FX Empire