Natural gas has slipped under $3 as summer heat fades across the United States, and FXEmpire analyst Christopher Lewis sees the market probing toward $2.75. He treats short-term rallies as selling opportunities while prices sit below the $3.50 barrier.
Natural gas is trading under $3.00, unable to hold above its flattening moving averages, and the market looks set to test the $2.75 region. According to FXEmpire: "this time of year is poor for natural gas", a seasonal weakness the analyst ties directly to fading demand.
The move down tracks the weather. The recent heat wave has come and gone, and Lewis argues the lack of heat is driving down demand across the United States. Summer consumption, he notes, does not match the demand seen in the winter.
For now the upside is capped. Lewis calls the $3.50 level a barrier, and he suggests a break above it could open the way toward $4.50. Below that level, he continues to view short-term rallies as selling opportunities rather than entries.
He also flags that the market may now be getting stretched to the downside, which could set up a rally that then fades again. That reading keeps his stance defensive rather than bullish, even after the slide under $3.
The broader picture, in Lewis's view, is a market simply playing out its usual seasonality and cyclicality. He does not look to buy until closer to the fall, when winter contracts trade and cold weather can cause spikes.
Until then, he favors short-term trading, noting that big moves are unexpected.
Source: FXEmpire
Trading involves risk.
Risk Disclaimer
