Despite a gap-down opening, natural gas bulls look ready to bounce back amid growing concern over the new EU law to cut planet-warming methane emissions and attempt to cap gas prices.
Monday’s meeting of the energy ministers of the European Union countries in Brussels to attempt to tame Europe's energy crisis ended in a stalemate.
This raises concern over the success of their attempt. If it will be successful or not will finalize the direction of the natural gas futures during this week.
The natural gas traders are likely to behave collectively once a decision comes out of this meeting, as the price-action of the natural gas futures seems to be under pressure from both the bulls and the bears in today’s trading session.
On the weather front, a frigid US pattern is to play out Dec 17-26 for strong to very strong demand, but the warmer trends for Dec 27-30 could lead to disappointment.
Technically, in the daily chart, if the natural gas futures find a breakdown below the immediate support at $6, a sharp reversal could start in today’s trading session.
Undoubtedly, the risk/reward ratio is good for traders as this risk is only 2%, whereas the reward could be more than 12% this week as the put/call ratio is still in favor of the bulls.
Disclaimer: The author of this analysis does not have any position in Natural Gas futures. Readers are advised to take any position at their own risk, as Natural Gas is one of the most liquid commodities in the world.