Natural gas markets gapped higher to kick off the week on Monday as a cold snap is starting to affect the United States.
Natural gas markets have gapped higher to kick off the trading week on Monday, as a cold snap has hit the United States. We have seen the market pull back slightly from the open but quite frankly this will probably get filled, and then the market probably goes looking towards the 50 day EMA. After all, this is the time of year where you want to own natural gas, despite the fact that it may be a warmer than usual winter. With this being said, if you have been following me here at FX Empire, you know that I have been looking for “one last hurrah” for the market going into the winter, and then potentially a move towards the $3.00 level.
In fact, that is the trade now is to simply wait for that move and then take advantage of an opportunity to sell natural gas at higher levels. I think we have one more short-term buying opportunity, followed by a longer-term and probably much bigger selling opportunity ahead. With that in mind, I like the idea of taking advantage of any exhaustion candle above the start shorting for a bigger move, but if you are a little bit nimbler and pay attention to the markets quite closely, then you may be able to get away with buying the natural gas markets for a potential move towards the three dollars handle.
This does not mean that it is going to be an easy trade, just that it is one that I can make a strong argument for given the time of year and of course the fact that recently temperatures have plunged. With that, I am short-term bullish but longer-term bearish.