UPDATE Natural Gas Price Analysis August 2020 | A Sustainable Rebound?

It's been quite a year for natural gas we've seen it hit um its worst level in about four years that was uh just under two months ago and then in the last few days we've seen it push out to its best levels um well pretty much since december of last year so does this mean that finally natural gas is turning the corner and we go we're seeing the start of a new bull market there's been a lot of focus on precious metals in recent weeks with some of the moves we've seen but

Natural gas is a really interesting market as well we've had a trade on this uh for some time we'll take a look at that in a second um we had this decline in natural gas um coming into this year from the november highs just shy of three traded as low as uh one and a half so pretty much um halved from november into june and since then we've seen this really strong uh recovery you know particularly at the beginning of august where we saw the price surge so i'm just wondering

Um what's the next trade for natural gas i think there is a trade there as well um but to look at our existing positions let's take a look so here's the natural gas trade we did uh third week of july the last time we looked at it so it was a buyer at 168 just above there and clearly that market has moved quite a bit in our favor we're up just over 400 pounds so slightly more than twice the risk so i do need to adjust that trade and also i'll come back in a couple of minutes we'll look at this in more detail

And see where where the opportunity might be hello i'm david jones from capital.com and i thought um we do an update on natural gas because we've seen really impressive rise over recent weeks since the last video so as usual in this video i'll take a look at what's driving it what the outlook could be the levels to watch then we'll jump back onto the platform i think we need to adjust that trade that we've got on at the moment and see if there's a another opportunity

In natural gas over the next few weeks as usual if you're watching this and you haven't subscribed if you could click on subscribe it means um because you support the channel and we can continue to push out uh lots of hopefully interesting and varied videos in the months ahead but let's get into it let's take a look at what's been moving natural gas and see what the big levels are so this has been an incredibly uh volatile year it hit its worst levels since 2016

So slipping to a four-year low but where we are now because of the recovery the price of natural gas is actually trading at its best levels for year to date it smashed through quite a few few barriers on the way up what has been weighing on the price um has been a few things inventories this year have been above the five year average and about 30 percent higher than they were a year ago so there's been plenty of natural gas in stock as it were this week we had an update from the u.s energy information administration and it

Said that both production of gas and demand for gas uh will will fall during 2020 and 2021 and this is due to uh you know a drop in economic activity caused by uh the lockdowns plenty of office buildings public sector buildings all of this um not having people in them and that's been one way the demand for gas has been hit so if we did see demand drop this year which it has been and into 2021 that would be the first time since 2006 that we've seen a fall in

Demand for natural gas for two consecutive consecutive years but the energy administration information administration also did slightly revise up um its end-of-year price expectations uh for natural gas and i think we're seeing this in the market you know we had seen a market they've been pretty short um all the way into into this year and we've seen this really sharp rise so let's have a look at the big levels to watch then we'll um get back onto the platform and look to sell the trade up

So i think the most immediate barrier on the upside is um that the hive so far uh in this rally that we've seen so around about 2.35 six of august highs after that i think we're looking back to the end of last year so around about uh 2.50 from december as as the next obstacle on the downside because of the rise um i think this is where the opportunities could be if we do see the price come under a bit of pressure lots of support levels left the most immediate again it's set this month

Around 2.11 the fourth of august lows but let's put some color on these numbers let's see what we could do because i want to try and buy a pool back here and also adjust the existing trade let's jump back onto the platform i thought let's start off with a really big picture for natural gas or the big picture of the last few years at least i've gone back to november 2018 when the price almost touched five dollars and since then

We've seen this price uh in a steady decline you know trading is low as i said almost as low as one and a half uh more recently so you can see that the size of the decline in natural gas and we have had i think a few breakouts along the way that looks like the price is gonna start recovering it's definitely wrong footed me a few times over the last few months but i'm wondering is the latest break um actually the sign of a decent turn so what i want to do

Probably to focus on the period from november last year to the present day and see about setting our trade up so the reason we did the trade last time around i think we did the trade uh it was the third week of july so it would have been i think around about here uh when the price dipped below 1.7 and i was really looking we're going to look at indicators in a second but i was looking at the price section the price action late june it did slip below those um sort of what march april

Lows but didn't hold this it was something of a false break and since then we've seen the price recover we've pushed above uh the may high uh briefly i think we're pretty much um trading not far away from that now so i do wonder um if if this is the start finally of a reversal in natural gas let's um let's bring in the indicators so this is the year to date let's talk about these indicators briefly so the rsi has not surprisingly gone overbought so

A 10-day rsi here and as i often say in strong trending markets we will get an extreme reading from the rsi so perhaps we don't pay too much attention to that but i am just a little bit wary considering the size of the surge that we could see the price unwinding slightly from here um and the macd down here still bullish but you can see has been falling that macd histogram has been falling so perhaps we are getting ready for a bit of a sell signal

Uh in natural gas but for me the price action is all important you know we've broken above these may highs we held for what a couple of days i suppose two or three days above the highs i do think we could see a correction here but that's what i think the opportunity is what i want to do is pick up on this trend from the 25th of june so let's just um switch this over to a shorter term chart so here's the trend here's that recovery

Trend again i'm not too bothered about the shorter term indicators let's focus on the price so that trend line's done a pretty good job uh on the way up it's currently coming in um just above 1.75 so about 50 cents lower than where we are now and i think there's definitely scope for a bit of weakness in natural gas in the short term but i want to use that as a buying opportunity so what i want to do is buy into this trend um where would you put your stop losses i suppose

The most aggressive place for a stop-loss would be below the 10th of august lows at 220. it's not a million miles away from where we are now then we have these spiky lows fourth of august ahead of 210 but for me the better place for the stop is down here so somewhere in this range uh from around what 180 175 to 185 that sort of area where we spent a bit of time before really breaking out so what i want to do i want to buy a dip here and i think what i might do maybe we'll see something of a knee-jerk sell-off

Back to two i'm gonna set an order in to buy at 205. two dollars and five cents i'll put my order uh there in the market and then what i'll do i'll put my stop-loss i'm gonna put my stop-loss down um i suppose the other side of a dollar seventy five let's go a dollar seventy so i'm gonna buy 205 with a stop at a dollar seventy let's look at the existing trade so when i put that trade on originally we bought at 168 with a stop at 145. so 23 uh stop effectively

On that trade uh i should really trail that stop up and put it you know perhaps maybe 23 cents below the highest point reached the market has traded as high as 235 i'm gonna move my stop on that to uh two dollars and ten cents so i'll put that that order in at 2.1 to uh take some profit if the market sells off from here let's just set that up of course if the market takes off um without going down to 210 i'm still in the trade and i'll have my order sitting here if

It does sell off at 205. let's just set that up quickly so my order's ready to go i'm going to buy 750 if the price drops back to 205 if 205 gets filled put a stop in at 1.7 let's place that limit order let's flip things back to a daily chart and for me you know as long as sort of 180 holds we're still in this uptrend i do think it's a bit overcooked overheated part pardon the pump in the short term but um definitely for now i think as

Long as we hold 180 uh i'm still happy to be a buyer uh on dips and it's only if we start to slip below there does it look like this trend is over but for now i'm expecting further recovery with probably the initial target um 250 so 2.50 uh those early december heights we'll see how it works out over the next few weeks that's it for this update uh in natural gas perhaps has gone too far in the short term we'll see what the next few weeks bring but from me davidjones

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