Natural Gas Inflexion Point
Natural Gas Collapse;
It HAS been warm out..and a recession IS pending , here in the EU and China. The USD has been extremely strong. AND the EU long ago achieved targeted Nat Gas storage levels of 80% of capacity (more on that later). So, all in all, A LOT of bearish factors for NG...all at once following massive bullish fundamentals.
Markets, given a little time, do a pretty good job of discounting known knowns. And then some.
Russia invaded the Ukraine on Feb 24 2022 and 6 months later the NG 1 contract topped on August 23 at 10.03. The EU mandate to fill storage to 80% of capacity was reached August 15. They hit 93% in November.
Storage levels in the EU are at 83% and will rapidly decline over the
next 2 months to under 50% of capacity ( based on 5 year averages). NG seasonal history suggest buy support beginning mid Jan/Feb into mid Jun.
Since the Aug high Nat Gas has declined $6.52 in a 3 wave pattern over 5 months. Premiums for LNG into NW Europe vs Asia are now flat. By the end of March China should be through it s Covid surge and open for business.
Note the RSI positive divergence, Fib retrace levels and previous low support.
The 4th wave of lesser degree support, the multiple Fibonacci and Fib extension support around 3.40 buttressed by the RSI divergenc and seasonal support, all suggest very high technical upside risk. Coupled with the potential for a swing in the discounting of fundamentals......
This is not where I would be short.