Natural gas is trapped between $3 support and $3.50 resistance, with FXEmpire's Christopher Lewis calling it a sideways market suited to short-term trading. Reuters reports futures held steady on Monday as falling output and rising LNG export flows offset forecasts for cooler weather.
Natural gas keeps grinding sideways, and FXEmpire analyst Christopher Lewis sees $3 as the support floor and $3.50 as resistance. The market has done very little, dancing between the 50-day and 200-day EMA in what is typically a quiet time of year. That range has held for roughly six weeks.
Weather keeps the range intact
The contract trades on US weather, and Lewis notes a recent stretch of brutal heat wasn't enough to destroy supply. Now temperatures are starting to cool, which he says will help as well.
That fundamental picture lines up with the day's trading. According to Reuters, US natural gas futures held steady on Monday as a decline in output and rising flows to liquefied natural gas (LNG) export plants offset forecasts for less hot weather over the next two weeks than previously expected.
What could break the deadlock
Lewis frames the market as fit for short-term traders rather than swing positions, calling 5-minute and 15-minute charts a decent market to trade. A break above $3.50 would be the signal he watches, at which point he says he would look for signs of exhaustion to start shorting again within the following couple of weeks.
Until then, the consolidation demands caution on any natural gas position. Lewis says it is a difficult market to get aggressive in at the moment, so trade size will matter.
Sources: FXEmpire, Reuters (snippet-based)
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