The U.S. Energy Information Administration (EIA) said the U.S. set new records last year when it came to producing, consuming and exporting natural gas. This should keep natural gas on the radars of leverage-hungry traders using ETFs.
“The EIA reports that the United States set new records in natural gas production, consumption, and exports in 2018,” wrote David Becker in an FX Empire report. “In 2018, dry natural gas production increased by 12%, reaching a record-high average of 83.8 billion cubic feet per day according to the EAI. This increase was the largest percentage increase since 1951 and the largest volumetric increase in the history of the series, which dates back to 1930. U.S. natural gas consumption increased by 11% in 2018, driven by increased natural gas consumption in the electric power sector.”
Right now, however, natural gas prices are moving sideways, but watching certain key resistance and support levels might help to determine where they may be headed.
“Natural gas prices moved higher but remain range-bound,” Becker wrote. “Support is seen at the November lows at 2.52. A break of this level would see a test of the October lows at 2.38. Resistance is seen near the 10-day moving average at 2.73. Short term momentum is neutral as the fast stochastic hover near the middle of the neutral range with a flat trajectory.”
“Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal,” he added. “This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in red with a declining trajectory which points to lower prices.”
Leveraging the Nat Gas Trade
For the bulls looking to go long, there’s the Direxion Daily Natural Gas Related Bull 3X ETF (NYSEArca: GASL). GASL seeks daily investment results equal to 300% of the daily performance of the ISE-Revere Natural Gas IndexTM. The index is designed to take advantage of both event-driven news and long term trends in the natural gas industry.
For the bears, the Direxion Daily Natural Gas Related Bear 3X Shares (NYSEArca: GASX) should continue to appease the short side traders. GASX seeks daily investment results equal to of 300% of the inverse of the daily performance of the ISE-Revere Natural Gas IndexTM, which is designed to take advantage of both event-driven news and long term trends in the natural gas industry.
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