Natural gas edged higher early Tuesday but stayed boxed inside its summer range, with the 200-day EMA capping every attempt to rally. FXEmpire analyst Christopher Lewis pegs $3 as the floor and $3.50 as resistance, and says ample supply is keeping the market calm.
Natural gas rose slightly to open the Tuesday session but remains stuck in a range, according to FXEmpire analyst Christopher Lewis. The market tried to rally early in the session yet failed as the area above the 200-day EMA kept acting as a barrier.
Ample supply keeps prices calm
Lewis ties the choppiness to the usual quiet of the summer range. He points to a recent bout of extreme heat in the United States, but says there was more than enough supply to keep the market fairly calm. As a result, prices did not spike.
Because of the oversupply, no massive move materialized. Lewis points to plenty of gas still sitting in storage, which leaves the contract hovering right around the 200-day EMA. He does add that the market eventually heads into the heating season, when demand becomes a more constant drain.
Where the levels sit
For now, Lewis marks $3 as a floor and $3.50 as resistance. A break above $3.50 would not turn him into a buyer, he says. Instead, he would wait for signs of exhaustion and then look to short again, arguing the market this time of year has been negative or at best flat over the past month and a half.
Short-term traders can still work both sides of the range, but Lewis warns that approach means watching the charts closely.
Source: FXEmpire
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