Natural Gas Price Analysis September 2020 | Correction Before Rebound?

by birtanpublished on October 2, 2020

it's been a great few months for the
natural gas price with the price um
almost but not quite doubling off those
june lows june lows came in
around uh 152 and have traded
uh just above 280 in recent days but i'm
just wondering
uh are we reaching a turning point uh
for natural gas
so in this video we'll take a look at
things in more detail and see where the
opportunities might be
we've definitely seen a turnaround in
the fortunes of natural gas this year
peaked last year last november up around
about 294 295
and was under pressure for pretty much
all of this year
uh into june as well setting a
multi-year low
braking below but very briefly below
those old lows
from march april and since then we've
seen this fantastic turnaround i'm just
wondering
where the opportunity is next do we
think about going short up here
ahead of those old highs from november
um or actually is there more
still to come this is just a pause in
the trend before it pushes much higher
we do have a trade running at the moment
let's take a look at it
so our natural gas trade has done really
well we placed it back on the uh
the 21st of july uh buying in
at 168 for a risk of a couple of hundred
pounds and it's up
about 800 pounds so fast we've made four
times the risk
it's been the best performing natural
gas trade i've done over the last year
by quite some margin i'm going to take a
look at those natural gas trades
um in a few minutes time because it's um
it's been an interesting year i think
when it comes to trading natural gas
so the question is now i think we need
to think about clearly moving the stop
and locking in some profit
and also setting up the next trade uh
for natural gas so we're gonna see this
momentum carry on
i'll talk a bit more about what's been
driving it we'll look at the big levels
then we'll come back on and see if we
can uh
get our trade set up hello i'm david
jones from capital.com
and i thought um we do an update on
natural gas you can see we've seen
really big move uh over recent months
which has definitely helped our our p
l when it comes to natural gas but i do
wonder uh i'll be
reaching perhaps a turning point so in
this video
we'll talk about what's been driving it
lately the big levels to watch
then we're going to go back onto the
platform i'm actually going to look at
the trades i've done over the last year
for natural gas
then we'll take a look at it in more
detail see what we can do with that
existing trade that's got about four
times the risk in terms of profit at the
moment
and um see if there's another trade to
do as usual if you're watching this
and you haven't subscribed if you could
click on subscribe it helps
support the channel means we can
continue to push out four videos
every week on the various markets that
we cover but let's get into uh natural
gas let's talk about
what's been moving the price so it's
been a really volatile year
2020 for the price of gas in common with
plenty of other markets of course
uh we saw it hit its worst levels so the
lowest price
since 2016. and at the moment uh we're
up at the highs for the year to date
pretty much and and not far off uh highs
from
last november so it's really turned
around
over recent months when we last looked
at natural gas we talked about
the inventories um basically the
stockpile for natural gas
and these were high these were higher
than they were at the same time five
years ago
and 30 percent higher uh than a year ago
so we do have um you know plenty of
supply it looks like but we also had
demand during the summer we saw various
um
heat waves uh in the us and this helped
uh the
the demand for the likes of liquefied
natural gas
powering air conditioners so despite the
lock down and despite
offices being being shut we have seen
still plenty of demand for natural gas
but i think we do have some indecision
at the moment what the next few weeks
the next few months
is going to look like from a supply and
demand point of view the the energy
information administration in the u.s
has upped its target uh for the end of
2020 for natural gas and has given us a
target
of uh 2.49 but you can see that that
indecision
uh in the market be what's been going on
with the price action it has
pushed out to fresh highs for this
recovery but broadly speaking
the last few weeks have been somewhat
range bound for the price of national
natural gas so i think there is um
almost a wait-and-see
feeling in the market at the moment
let's talk about the levels to watch
then we'll jump back on the chart so
2.81
is the most uh recent high and i think
after that i think
three dollars you know it's going to be
could be potentially
a big barrier from a psychological point
of view but saying that when natural gas
starts moving you know it does have
an ability to just blast through these
previous previous barriers
on the most recent uh low we've got 2.60
and that's really the range from 2.60 to
2.80 that's where we've been trading uh
more recently but to put some color
on these numbers let's jump back on the
chart uh look at things in more detail
adjust the trade and see if there's a
new trade to be done
before we get into natural gas i thought
it'd be interesting to have a look at
the trades i've done
on natural gas because i know it has
been a really difficult market for me
over the last year to say the least so
what i did um
with the capital account i can get
emailed all the trades i've done over
over the last year and here's natural
gas so here's the latest one this is our
open profit of around 800 pounds
but you can see what a challenging year
it has been
trading natural gas i definitely felt uh
along the way that whatever i did the
price of natural gas
was going to go the wrong way so this
trade is dragging us
back up to more of a break-even position
on natural gas
but i think it's really interesting uh
to see it broken down like this so many
losers getting wrong-footed all the time
um and how important it is to run your
profits so
this trade that's made about 800 pounds
so far
has uh helped claw back um
four losses for losing trades of 200
pounds
ago so i thought it'd be interesting to
take a look at that but let's get into
what's happening
uh in the here and now i do think we
have seen a turnaround
for natural gas uh in recent recent
weeks if we picked up on if we went
right back then our trend perhaps looks
something like this um
breaking out here in april uh and i
think i did got
get footed back then as well buying in
and we've seen a lot of false breaks in
in natural gas in both directions over
the last 12 months or so
and then the reason i did the trade if
we zoom in
to what's been going on this year it was
this move in june
uh to the lows broke through the old
lows the old support from march and
april
but we never got any follow-through so i
ended up buying in
uh where was it 168 or something i think
probably around here wasn't it when we
came back for the retest
and since then the market has moved a
lot higher so i had a really obvious
place for a stop loss
and i think this is a problem at the
moment we don't have that much of an
obvious place let's just step this out
again
so we do have some hurdles uh coming up
we've got the most recent highs
at 281 then we've got this old high up
here
294 295 ahead of three so we do have
some real big barriers coming in
uh on the upside for natural gas so i
think there's an argument for doing a
couple of things here if we look at the
rsi down here
it went overbought on the way up early
august and has stayed pretty much
in overbought since then it's lost a lot
of momentum over the last couple of
weeks or so so that is suggesting that
perhaps this rally
is a little bit tired uh up at these
levels so if you wanted to go short
natural gas
you can go short and for me the logical
place to put a stop would be above those
highs
above those 281 highs is where i put a
stop if i was going short but i'm
reluctant
to go short because this trend is still
up on gas even though we are a long way
away
from uh where that where the line is at
the moment so i think
in the short to medium term i think it's
definitely got the scope to correct
uh from this from this into this trend
let's just look
at august on an hourly chart so you can
see um how good
the support from 255 through to 260 has
been
you know perhaps if we start breaking
below there then we get something of a
deeper sell-off
then we've got bigger support coming in
uh around about 241.
so i'd still be tempted to be a buyer on
a dip on natural gas but not buying up
here i'd rather sit this one out
for a bit see if we get a sell-off and
uh look to buy in perhaps next time
around but i still need to tweak
my existing trade um let's take a look
at that so my stop at the moment on this
is at 2 47
i have been moving it up so boarding at
168
take profits uh stop at 2 47. let's take
a look
at what that looks like on the chart so
the moment my my stop at the moment is
sitting
around about here which is a fair enough
place i might crank it up a bit i'm
going to move it
to perhaps 254 so i'll nudge it up
slightly if we do start to break down
to new lows for the week i'll be taken
out of the trade
so that's in now at um 254
so i'll be happy to take the profits uh
on that sit this one out if we get a
much deeper sell-off back to the low
twos
i think it looks like a good opportunity
again so we'll look at it
next time around that's it for our
natural gas update we'll see if this
indecision can be sorted out
over the next few weeks but from me
david jones and capital.com
good luck with your trading
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